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Title: Optimizing incentive policy of energy-efficiency retrofit in public buildings : a principal-agent model
Authors: Liang, X
Shen, GQ 
Guo, L
Issue Date: 2019
Source: Sustainability, 2 June 2019, v. 11, no. 12, 3442, p. 1-19
Abstract: The building sector consumes most energy in the world, especially public buildings, which normally have high energy-use intensity. This phenomenon indicates that the energy-efficiency retrofit (EER) for public buildings is essential for energy saving. Incentive policies have been emphasized by governments in recent years, but their effectiveness has not been sufficient. A major reason is agency problems in EER and that the government and building owners have asymmetric information. Furthermore, most policies apply identical standard to existing buildings of different types, resulting in resistance from owners and tenants. To mitigate this issue, this study proposes a principal-agent model to optimize incentive policy in EER. The proposed model defines two pairs of principal-agent relations (i.e., the government-owner and owner-tenant) and models their behaviors under different scenarios as per principal-agent theory. The results indicate the optimal incentive policies for different scenarios. In addition, critical factors of policy making, such as cost, risk, uncertainty, and benefit distribution are discussed. This study has implications for policy that will benefit policy makers, particularly in promoting EER by mitigating the agency problem found for the different scenarios.
Keywords: Energy-efficiency retrofit
Policy making
Principal-agent theory
Incentive
Publisher: Molecular Diversity Preservation International (MDPI)
Journal: Sustainability 
EISSN: 2071-1050
DOI: 10.3390/su11123442
Rights: © 2019 by the authors. Licensee MDPI, Basel, Switzerland. This article is an open access article distributed under the terms and conditions of the Creative Commons Attribution (CC BY) license (http://creativecommons.org/licenses/by/4.0/).
The following publication Liang, X.; Shen, G.Q.; Guo, L. Optimizing Incentive Policy of Energy-Efficiency Retrofit in Public Buildings: A Principal-Agent Model. Sustainability 2019, 11, 3442, 1-19 is available at https://dx.doi.org/10.3390/su11123442
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