Game Analysis of Behavior between Central and Local Government under Housing Price Control Policy

In recent years, the rapid growing housing prices and the continuing expanding real estate bubbles have become a hidden danger to the Chinese economy. Price regulation has also become one of the current hot issues. Though the central government issued a number of decrees, the price has been increasing, especially in first-tier cities, like Beijing, Shanghai, Guangzhou, and Shenzhen. What factors contributed to the high prices? The central and local governments play an important role in housing price regulation. From the perspective of game theory, behavior of central and local government under price control policies are described and analyzed in this article. We established a game model and got equilibrium between the two games. In the end, we raised some reasonable policy recommendations by the results of game analysis.