Benefit distribution in urban renewal from the perspectives of efficiency and fairness: A game theoretical model and the government's role in China

Abstract Due to the complexity of stakeholder relationships, social conflicts related to unbalanced benefit distribution hinder the implementation of urban renewal. Based on game theory, this study investigates the bargaining process between developers and residents concerning benefit distribution and considers the government's role in achieving through various regulatory strategies the goals of either fairness or efficiency. The fairness-efficiency solution for both stakeholders in the model is the symmetric Nash bargaining solution with equal information. Urban renewal in China is gradually changing from being efficiency oriented to being fairness oriented, while the issues of vague property boundaries and defective articles remain. To promote cooperation and reduce negotiation costs, the simplification of administration procedures, the establishment of information sharing mechanisms and the introduction of third-party agencies to ensure harmony between developers and residents is recommended.