Should low-carbon subsidies be given to real estate developers or homebuyers? An evolutionary game theory analysis on small-world networks

Abstract

Subsidies can stimulate the development of low-carbon housing. However, the question arises: which is more effective, subsidizing homebuyers or subsidizing real estate developers? This study can provide a basis for the formulation of more efficient subsidy policies. To investigate the effectiveness of different subsidy approaches, this study establishes an evolutionary game model within a framework of small-world networks, analyzing the evolutionary stability of the system and its overall benefits. The simulation results indicate the following: (1) The initial strategies of developers and homebuyers significantly influence the direction of system evolution, indicating that low-carbon subsidy policies are effective only when the initial willingness values of both parties exceed a certain threshold. For homebuyers, this threshold ranges from 0.5 to 0.7, while for developers, it ranges from 0.3 to 0.4. (2) Subsidizing developers outperforms subsidizing homebuyers in accelerating the evolutionary process towards low-carbon strategies. (3) Subsidizing developers results in greater benefits for the government, developers, and homebuyers, with the optimal subsidy amount ranging between 100CNY/m2 and 200CNY/m2. At the 35th iteration, with B = 200 CNY/m2, the system achieves the maximum average revenue of 43.9 CNY/m2. When B = 100 CNY/m2, the system's average revenue increases with the number of iterations, rising from 40.5 CNY/m2 to 43.0 CNY/m2. (4) Subsidizing developers is more conducive to the prosperity of the low-carbon housing market.