Trilateral Game Analysis On Floor-area Ratio Of Residential Building

The real estate industry, as one pillar industry in China, with comprehensiveinfluence in national economy, is playing a more and more important role in China’sdevelopment. However, along with rapidly growth, there also exist some fatal issues inthe real estate industry blocking its further normal development. And the phenomenonof floor-area ratio (FAR) violation is just one of such issues, which need to be paidsufficient attention and be resolved as soon as possible. The aim of this paper is to findthe root cause for floor-area ratio violation issue and attempt to offer some methods tosolve it.In this paper, Firstly, with game theory analysis approach, the author makesrelationship analysis for3subjects: Government, property developers and consumers,which are the stakeholders involved in this issue. The author finds out that the mainissue between government and property developer lies in “land price” and the “penaltystrength”. While that between property developer and consumers lies in the “house saleprice”. Thus, to solve the issue is equal to find out how to achieve balance betweenland price, penalty strength and house sale price. And through relationship analysisbetween Floor-Area-Ratio and house price, and among political FAR, land price andconstruction fee, the author works out the curve diagram of FAR and reasonable houseprice, and further works out the curve diagram of FAR and penalty. Secondly, based onabove finding curves and bellow three concepts---Policy floor-area ratio （PFAR）,economy floor-area ratio(EFAR) and reasonable floor-area ratio(RFAR), the authorfinally sets up an economic method to solve this issue. All above work are based onbellow theory: only when the penalty higher than the extra net profit, the highest EFARcan turn to be less than the PFAR.