Design of effective subsidy policy to develop green buildings: from the perspective of policy benefit

In order to promote the development of Green Building Market without bringing heavy financial burden to the government, this paper studies the optimal subsidy problem in Green Building Market from the perspective of policy benefit, in which the government and the end-user are the principals and the developer is their agent. Optimal subsidy principal-agent models under conditions of asymmetric information and complete information are established, and equivalent models are presented to get the optimal solutions. The results show that from the perspective of policy benefits, subsidy policy is influenced by construction costs, transfer paid by the end-user and developer’s preference toward green buildings. Furthermore, comparisons of models under two conditions demonstrate that eliminating asymmetric information can contribute to more green building areas and fewer unit subsidies. Finally, a numerical example is presented to show the effectiveness of the model.