System Dynamics Based Research on Energy Efficient Residence Market

Chinese government has been propagandizing energy- efficient residential buildings for more than 20 years, but the progress is unfortunately not satisfactorily smooth. One and most important reason is the lack of incentives to energy-efficient residence for both consumers and developers. This paper discusses the features of the residence market at present in China, analyzes variables influencing consumers´ and developers´ decision-making on energy-efficient residence, puts forward measures the government can take to tackle market failures. Considering the complex interactions among consumers´ choices, developers´ choices and government-issued policies, a system dynamics model is established to explore the mechanism of the market. This model could be used to simulate the growth of the energy-efficient residence market and predict the responses of consumers and developers to certain economic policies, so as to enhance the policies´ reasonability and practicability.