Prefabricated housing subsidy analysis in China based on an evolutionary game model
Abstract
Prefabricated housing and cast-in-site housing are two alternatives for selection by developers and customers. The government, as the policy maker, creates incentive policies to encourage developers and customers to choose prefabricated housing. This paper aims to analyze the subsidy mechanism to theoretically confirm the subsidies’ scopes, amounts and end times through an evolutionary game model and simulation. In the game model, government subsidies affect the interactions between developers and customers in the decision-making process. The findings are as follows: 1) The developer housing subsidy can lower the housing price, while the customer housing subsidy can increase the price; 2) The government should first offer the developers a larger subsidy amount during the early development stage and then offer the customers a smaller subsidy amount later; 3) The government should determine the end time based on the proportion of developers and customers who choose prefabricated housing; 4) A higher prefabrication ratio may not always improve the development of prefabricated housing, and there is an optimal production scale that creates the best development situation. The empirical analysis shows that this model can help the government develop reasonable and optimal subsidy policies within the limit of budget to stimulate developers and customers.
Keyword : prefabricated housing, subsidy, developer, customer, government, evolutionary game model
How to Cite
Shen, K., Li, X., Cao, X., & Zhang, Z. (2021). Prefabricated housing subsidy analysis in China based on an evolutionary game model. Journal of Civil Engineering and Management, 27(7), 553-570. https://doi.org/10.3846/jcem.2021.15610
This work is licensed under a Creative Commons Attribution 4.0 International License.
References
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Beijing Municipal Commission of Housing and Urban-Rural Development. (2011). Interim preferential measures for the implementation of area awards for industrialized residential projects (in Chinese).
Cao, X. Y. (2012). Environmental impact assessment and comparative studies on industrialized house and traditional house construction. Tsinghua University (in Chinese).
Cao, X. Y., Li, X. D., Zhu, Y. M., & Zhang, Z. H. (2015a). A comparative study of environmental performance between prefabricated and traditional residential buildings in China. Journal of Cleaner Production, 109, 131–143. https://doi.org/10.1016/j.jclepro.2015.04.120
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Casares, E. R., Ruiz-Galindo, L. A., & García-Salazar, M. G. (2018). Transitional dynamics, externalities, optimal subsidy, and growth. Journal of Dynamics & Games, 5(1), 41–59. https://doi.org/10.3934/jdg.2018005
Fan, R. G., & Dong, L. L. (2018). The dynamic analysis and simulation of government subsidy strategies in low-carbon diffusion considering the behavior of heterogeneous agents. Energy Policy, 117, 252–262. https://doi.org/10.1016/j.enpol.2017.12.003
Gu, S. Y., Zhang, P., & Yang, J. Y. (2018). System dynamics model based on evolutionary game theory for quality supervision among construction stakeholders. Journal of Civil Engineering and Management, 24(4), 318–330. https://doi.org/10.3846/jcem.2018.3068
Hassani, H., Sattar, M., Odulaja, A., & Santoso, W. M. (2018). A statistical approach for a fuel subsidy mechanism. Energy Policy, 119, 666–673. https://doi.org/10.1016/j.enpol.2018.04.012
Hong, J. K., Shen, G. Q., Li, Z., Zhang, B., & Zhang, W. (2018). Barriers to promoting prefabricated construction in China: A cost–benefit analysis. Journal of Cleaner Production, 172, 649–660. https://doi.org/10.1016/j.jclepro.2017.10.171
Hong, J., She, Y., Wang, S. Y., & Marinova, D. (2019). Impact of psychological factors on energy-saving behavior: Moderating role of government subsidy policy. Journal of Cleaner Production, 232, 154–162. https://doi.org/10.1016/j.jclepro.2019.05.321
Huang, S. J., & Wu, Q. W. (2018). Dynamic subsidy method for congestion management in distribution networks. IEEE Transactions on Smart Grid, 9(3), 2140–2151. https://doi.org/10.1109/TSG.2016.2607720
Shi, H., & Smyth, R. (2012). Economies of scale in the Australian tourism industry. Applied Economics, 44(33), 4355–4367. https://doi.org/10.1080/00036846.2011.589819
International Organization for Standardization. (2006). Environmental management – Life cycle – Principles and framework (ISO Standard No. 14040:2006). https://www.iso.org/standard/37456.html
Jia, E. L. (2013). The study of incentive mechanism on housing industrialization in our country: A perspective of evolutionary game theory [Master’s thesis]. Business School, Sun Yat-Sen University, Guangdong, China (in Chinese).
Jia, F. L. (2016). The evaluation of housing subsidies and system reconstruction of the public housing [PhD dissertation]. School of Mathematics and Statistics, Central China Normal University, Wuhan, China (in Chinese).
Jiang, S. S., Yang, G. S., & Xu, X. (2013). Building green building subsidy model design based on the government benefits. Project Management Technology, 11(10), 67–71 (in Chinese).
Kemp, P. A. (2010). The role and design of income-related housing allowances. International Social Security Review, 53(3), 43–57. https://doi.org/10.1111/1468-246X.00077
Keser, C., & van Winden, F. (2000). Conditional cooperation and voluntary contributions to public goods. Scandinavian Journal of Economics, 102(1), 23–39. https://doi.org/10.1111/1467-9442.00182
Khanzadi, M., Eshtehardian, E., & Chalekaee, A. (2016). A game theory approach for optimum strategy of the owner and contractor in delayed projects. Journal of Civil Engineering and Management, 22(8), 1066–1077. https://doi.org/10.3846/13923730.2016.1210222
Li, X. J. (2020). Research on investment risk influence factors of prefabricated building projects. Journal of Civil Engineering and Management, 26(7), 599–613. https://doi.org/10.3846/jcem.2020.12917
Li, X. D., Su, S., Shi, J., & Zhang, Z. H. (2015). An environmental impact assessment framework and index system for the preuse phase of buildings based on distance-to-target approach. Building and Environment, 85, 173–181. https://doi.org/10.1016/j.buildenv.2014.11.035
Lopez, D., & Froese, T. M. (2016). Analysis of costs and benefits of panelized and modular prefabricated homes. Procedia Engineering, 145, 1291–1297. https://doi.org/10.1016/j.proeng.2016.04.166
Lu, W., & Yuan, H. (2013). Investigating waste reduction potential in the upstream processes of offshore prefabrication construction. Renewable and Sustainable Energy Reviews, 28, 804–811. https://doi.org/10.1016/j.rser.2013.08.048
Luo, W. (1991). Theoretical and positive study on economy of scale [Master’s thesis]. School of Economics and Management, Tsinghua University. Beijing, China (in Chinese).
Mariano, J., & Bilbao, A. (2009). Pareto-optimal solutions in fuzzy multi-objective linear programming. Fuzzy Sets and Systems, 160, 2714–2721. https://doi.org/10.1016/j.fss.2008.12.005
Ministry of Housing and Urban-Rural Development of the People’s Republic of China. (2020a). Overview of the development of prefabricated buildings in 2019 (in Chinese).
Ministry of Housing and Urban-Rural Development of the People’s Republic of China. (2020b). Research on green development of prefabricated buildings (in Chinese).
Ministry of Housing and Urban-Rural Development of the People’s Republic of China. (2021). Circular on the development of prefabricated buildings in China in 2020 (in Chinese).
Mohit, M. A., Ibrahim, M., & Rashid, Y. R. (2010). Assessment of residential satisfaction in newly designed public low-cost housing in Kuala Lumpur, Malaysia. Habitat International, 34(1), 18–27. https://doi.org/10.1016/j.habitatint.2009.04.002
Monty, S., & Barry, C. (2018). Investigating the cost of offsite in Western Australia. International Journal of Housing Markets and Analysis, 12(1), 5–24.
Qian, Q. K., Chan, E. H. W., Visscher, H., & Lehmann, S. (2015). Modeling the green building (GB) investment decisions of developers and end-users with transaction costs (TCs) considerations. Journal of Cleaner Production, 109(16), 315–325. https://doi.org/10.1016/j.jclepro.2015.04.066
Resendis-Antonio, O. (2013). Jacobian matrix. In W. Dubitzky, O. Wolkenhauer, K.-H. Cho, & H. Yokota (Eds.), Encyclopedia of systems biology. Springer. https://doi.org/10.1007/978-1-4419-9863-7_1367
Roca, C. P., Cuesta, J. A., & Sánchez, A. (2009). Evolutionary game theory: temporal and spatial effects beyond replicator dynamics. Physics of Life Reviews, 6(4), 208–249. https://doi.org/10.1016/j.plrev.2009.08.001
Shapiro, D. (1973). Economy of scale as a cost factor in the operation of school districts in Alberta. Canadian Journal of Economics, 6(1), 114–121. https://doi.org/10.2307/133867
Siqueira, K., & Sandler, T. (2004). Collective goods, common agency, and third-party intervention. Bulletin of Economic Research, 56(1), 1–20. https://doi.org/10.1111/j.1467-8586.2004.00185.x
Standardization Administration of China. (2017). Prefabricated building evaluation standard (No. GB/T51129-2017).
Ukoha, O. M., & Beamish, J. O. (1997). Assessment of residents’ satisfaction with public housing in Abuja, Nigeria. Habitat International, 21(4), 445–460. https://doi.org/10.1016/S0197-3975(97)00017-9
Wang, Y. W., Yuan, Z. M., & Sun, C. S. (2018). Research on assembly sequence planning and optimization of precast concrete buildings. Journal of Civil Engineering and Management, 24(2), 106–115. https://doi.org/10.3846/jcem.2018.458
Xing, Y. Z., & Deng, X. Y. (2017, July 28–30). Evolutionary game model study of construction green supply chain management under the government intervention. In IOP Conference Series: Earth and Environmental Science (Vol. 94), Singapore.
Xu, B., & Chen, J. J. (2010). Research on the measuring model of construction industrialization development level. In 2010 International Conference on Management and Service Science, Wuhan, China. https://doi.org/10.1109/ICMSS.2010.5575911
Yao, P. Z. (2018). Influence of precast rate on engineering cost of assembled shear wall structure [Master’s thesis]. School of Civil Engineering, Qingdao University of Technology, Shandong, China (in Chinese).
Zhang, S., Pan, Y., Li, N., & Sun, Q. (2014a). A comparative study of the direct costs between prefabricated housing system and the traditional construction technology – A case study of precast concrete wall panel. In Proceedings of the 18th International Symposium on Advancement of Construction Management and Real Estate (Chapter 35, pp. 349–358). Springer. https://doi.org/10.1007/978-3-642-44916-1_35
Zhang, X., Skitmore, M., & Peng, Y. (2014b). Exploring the challenges to industrialized residential building in China. Habitat International, 41, 176–184. https://doi.org/10.1016/j.habitatint.2013.08.005
Zheng, S. Q., Sun, W. Z., & Xu, Y. F. (2014). Estimation methodology of public housing coverage ratio and its application in Chinese cities. Systems Engineering – Theory & Practice, 34(11), 2791–2800 (in Chinese).
Beijing Municipal Commission of Housing and Urban-Rural Development. (2011). Interim preferential measures for the implementation of area awards for industrialized residential projects (in Chinese).
Cao, X. Y. (2012). Environmental impact assessment and comparative studies on industrialized house and traditional house construction. Tsinghua University (in Chinese).
Cao, X. Y., Li, X. D., Zhu, Y. M., & Zhang, Z. H. (2015a). A comparative study of environmental performance between prefabricated and traditional residential buildings in China. Journal of Cleaner Production, 109, 131–143. https://doi.org/10.1016/j.jclepro.2015.04.120
Cao, X. Y., Li, Z. F., & Liu, S. (2015b). Study on factors that inhibit the promotion of SI housing system in China. Energy and Buildings, 88, 384–394. https://doi.org/10.1016/j.enbuild.2014.11.064
Casares, E. R., Ruiz-Galindo, L. A., & García-Salazar, M. G. (2018). Transitional dynamics, externalities, optimal subsidy, and growth. Journal of Dynamics & Games, 5(1), 41–59. https://doi.org/10.3934/jdg.2018005
Fan, R. G., & Dong, L. L. (2018). The dynamic analysis and simulation of government subsidy strategies in low-carbon diffusion considering the behavior of heterogeneous agents. Energy Policy, 117, 252–262. https://doi.org/10.1016/j.enpol.2017.12.003
Gu, S. Y., Zhang, P., & Yang, J. Y. (2018). System dynamics model based on evolutionary game theory for quality supervision among construction stakeholders. Journal of Civil Engineering and Management, 24(4), 318–330. https://doi.org/10.3846/jcem.2018.3068
Hassani, H., Sattar, M., Odulaja, A., & Santoso, W. M. (2018). A statistical approach for a fuel subsidy mechanism. Energy Policy, 119, 666–673. https://doi.org/10.1016/j.enpol.2018.04.012
Hong, J. K., Shen, G. Q., Li, Z., Zhang, B., & Zhang, W. (2018). Barriers to promoting prefabricated construction in China: A cost–benefit analysis. Journal of Cleaner Production, 172, 649–660. https://doi.org/10.1016/j.jclepro.2017.10.171
Hong, J., She, Y., Wang, S. Y., & Marinova, D. (2019). Impact of psychological factors on energy-saving behavior: Moderating role of government subsidy policy. Journal of Cleaner Production, 232, 154–162. https://doi.org/10.1016/j.jclepro.2019.05.321
Huang, S. J., & Wu, Q. W. (2018). Dynamic subsidy method for congestion management in distribution networks. IEEE Transactions on Smart Grid, 9(3), 2140–2151. https://doi.org/10.1109/TSG.2016.2607720
Shi, H., & Smyth, R. (2012). Economies of scale in the Australian tourism industry. Applied Economics, 44(33), 4355–4367. https://doi.org/10.1080/00036846.2011.589819
International Organization for Standardization. (2006). Environmental management – Life cycle – Principles and framework (ISO Standard No. 14040:2006). https://www.iso.org/standard/37456.html
Jia, E. L. (2013). The study of incentive mechanism on housing industrialization in our country: A perspective of evolutionary game theory [Master’s thesis]. Business School, Sun Yat-Sen University, Guangdong, China (in Chinese).
Jia, F. L. (2016). The evaluation of housing subsidies and system reconstruction of the public housing [PhD dissertation]. School of Mathematics and Statistics, Central China Normal University, Wuhan, China (in Chinese).
Jiang, S. S., Yang, G. S., & Xu, X. (2013). Building green building subsidy model design based on the government benefits. Project Management Technology, 11(10), 67–71 (in Chinese).
Kemp, P. A. (2010). The role and design of income-related housing allowances. International Social Security Review, 53(3), 43–57. https://doi.org/10.1111/1468-246X.00077
Keser, C., & van Winden, F. (2000). Conditional cooperation and voluntary contributions to public goods. Scandinavian Journal of Economics, 102(1), 23–39. https://doi.org/10.1111/1467-9442.00182
Khanzadi, M., Eshtehardian, E., & Chalekaee, A. (2016). A game theory approach for optimum strategy of the owner and contractor in delayed projects. Journal of Civil Engineering and Management, 22(8), 1066–1077. https://doi.org/10.3846/13923730.2016.1210222
Li, X. J. (2020). Research on investment risk influence factors of prefabricated building projects. Journal of Civil Engineering and Management, 26(7), 599–613. https://doi.org/10.3846/jcem.2020.12917
Li, X. D., Su, S., Shi, J., & Zhang, Z. H. (2015). An environmental impact assessment framework and index system for the preuse phase of buildings based on distance-to-target approach. Building and Environment, 85, 173–181. https://doi.org/10.1016/j.buildenv.2014.11.035
Lopez, D., & Froese, T. M. (2016). Analysis of costs and benefits of panelized and modular prefabricated homes. Procedia Engineering, 145, 1291–1297. https://doi.org/10.1016/j.proeng.2016.04.166
Lu, W., & Yuan, H. (2013). Investigating waste reduction potential in the upstream processes of offshore prefabrication construction. Renewable and Sustainable Energy Reviews, 28, 804–811. https://doi.org/10.1016/j.rser.2013.08.048
Luo, W. (1991). Theoretical and positive study on economy of scale [Master’s thesis]. School of Economics and Management, Tsinghua University. Beijing, China (in Chinese).
Mariano, J., & Bilbao, A. (2009). Pareto-optimal solutions in fuzzy multi-objective linear programming. Fuzzy Sets and Systems, 160, 2714–2721. https://doi.org/10.1016/j.fss.2008.12.005
Ministry of Housing and Urban-Rural Development of the People’s Republic of China. (2020a). Overview of the development of prefabricated buildings in 2019 (in Chinese).
Ministry of Housing and Urban-Rural Development of the People’s Republic of China. (2020b). Research on green development of prefabricated buildings (in Chinese).
Ministry of Housing and Urban-Rural Development of the People’s Republic of China. (2021). Circular on the development of prefabricated buildings in China in 2020 (in Chinese).
Mohit, M. A., Ibrahim, M., & Rashid, Y. R. (2010). Assessment of residential satisfaction in newly designed public low-cost housing in Kuala Lumpur, Malaysia. Habitat International, 34(1), 18–27. https://doi.org/10.1016/j.habitatint.2009.04.002
Monty, S., & Barry, C. (2018). Investigating the cost of offsite in Western Australia. International Journal of Housing Markets and Analysis, 12(1), 5–24.
Qian, Q. K., Chan, E. H. W., Visscher, H., & Lehmann, S. (2015). Modeling the green building (GB) investment decisions of developers and end-users with transaction costs (TCs) considerations. Journal of Cleaner Production, 109(16), 315–325. https://doi.org/10.1016/j.jclepro.2015.04.066
Resendis-Antonio, O. (2013). Jacobian matrix. In W. Dubitzky, O. Wolkenhauer, K.-H. Cho, & H. Yokota (Eds.), Encyclopedia of systems biology. Springer. https://doi.org/10.1007/978-1-4419-9863-7_1367
Roca, C. P., Cuesta, J. A., & Sánchez, A. (2009). Evolutionary game theory: temporal and spatial effects beyond replicator dynamics. Physics of Life Reviews, 6(4), 208–249. https://doi.org/10.1016/j.plrev.2009.08.001
Shapiro, D. (1973). Economy of scale as a cost factor in the operation of school districts in Alberta. Canadian Journal of Economics, 6(1), 114–121. https://doi.org/10.2307/133867
Siqueira, K., & Sandler, T. (2004). Collective goods, common agency, and third-party intervention. Bulletin of Economic Research, 56(1), 1–20. https://doi.org/10.1111/j.1467-8586.2004.00185.x
Standardization Administration of China. (2017). Prefabricated building evaluation standard (No. GB/T51129-2017).
Ukoha, O. M., & Beamish, J. O. (1997). Assessment of residents’ satisfaction with public housing in Abuja, Nigeria. Habitat International, 21(4), 445–460. https://doi.org/10.1016/S0197-3975(97)00017-9
Wang, Y. W., Yuan, Z. M., & Sun, C. S. (2018). Research on assembly sequence planning and optimization of precast concrete buildings. Journal of Civil Engineering and Management, 24(2), 106–115. https://doi.org/10.3846/jcem.2018.458
Xing, Y. Z., & Deng, X. Y. (2017, July 28–30). Evolutionary game model study of construction green supply chain management under the government intervention. In IOP Conference Series: Earth and Environmental Science (Vol. 94), Singapore.
Xu, B., & Chen, J. J. (2010). Research on the measuring model of construction industrialization development level. In 2010 International Conference on Management and Service Science, Wuhan, China. https://doi.org/10.1109/ICMSS.2010.5575911
Yao, P. Z. (2018). Influence of precast rate on engineering cost of assembled shear wall structure [Master’s thesis]. School of Civil Engineering, Qingdao University of Technology, Shandong, China (in Chinese).
Zhang, S., Pan, Y., Li, N., & Sun, Q. (2014a). A comparative study of the direct costs between prefabricated housing system and the traditional construction technology – A case study of precast concrete wall panel. In Proceedings of the 18th International Symposium on Advancement of Construction Management and Real Estate (Chapter 35, pp. 349–358). Springer. https://doi.org/10.1007/978-3-642-44916-1_35
Zhang, X., Skitmore, M., & Peng, Y. (2014b). Exploring the challenges to industrialized residential building in China. Habitat International, 41, 176–184. https://doi.org/10.1016/j.habitatint.2013.08.005
Zheng, S. Q., Sun, W. Z., & Xu, Y. F. (2014). Estimation methodology of public housing coverage ratio and its application in Chinese cities. Systems Engineering – Theory & Practice, 34(11), 2791–2800 (in Chinese).