Green renovation of existing public buildings in China: A synergy mechanism of state-owned enterprises based on evolutionary game theory

Abstract

The high carbon emissions of public buildings owned by state-owned enterprises (SOEs) pose challenges to achieving carbon peaking and neutrality goals. Hence, the active participation of SOEs in green renovation is crucial. The literature mainly focuses on private enterprises and considers stakeholders' benefits from the perspective of economic incentives while neglecting SOEs, which are heterogeneous from private enterprises. To fill this gap in the literature, we propose a synergy mechanism underlying how the parent company and the operations and construction subsidiaries of a typical SOE cooperate and compete with each other to promote the completion of green renovation projects. We use an evolutionary game model to describe the synergy mechanism by analyzing political, economic, and reputational factors. We make the following conclusions: (1) Under the conditions of asymmetric game power, three equilibrium stable strategies are identified. The behavior of the parent company, which is notably influenced by political factors, is critical for the success of green renovation. (2) Political penalties are the fundamental factor breaking the dilemma of low implementation efficiency in green renovation. This event occurs when political penalties for non-incentive management exceeds the cost of incentive management. (3) Each factor exerts varying impacts on the synergy mechanism, with the impact of political, economic, and reputational factors decreasing sequentially. The government can rely on environmental benefit preference and reputational incentives to drive SOEs to actively participate in green renovation. The parent companies of SOEs can enhance political promotion penalties, increase political preference, and reduce decision-making error costs in green renovation to ensure smooth implementation.