Green Housing Subsidy Strategies Considering Consumers’ Green Preference

Abstract

In order to address the environmental impact of building carbon emissions, some developed countries have established certification standards for green housing. However, in many other countries, the green housing and the traditional housing may coexist in the market, and consumers’ willingness to buy the green housing can be different. This paper constructs a duopoly game model that includes a green developer and a traditional developer considering the heterogeneity of consumers’ green preferences and studies how mandatory green standards and subsidies affect the green developer’s pricing decision, profits and the carbon emission reductions of the green housing. The results show that when the marginal cost of green technology is high, raising green standards will hurt the green developer’s profits. Therefore, fiscal subsidies should be considered. The green developer obtains higher profits when subsidizing green consumers. The effectiveness of increasing carbon emission reduction is better when subsidizing the green developer and how to subsidize depends on the cost structure of the green housing. In addition, subsidizing green consumers and the incremental cost of green housing can improve the policy effect of green housing standards. Therefore, a mixed policy of subsidies and green standards can also have a good effect.