Incentive mechanism design of access management policy in affordable housing and analysis

Affordable housing is of much importance for Chinese subsidized housing. However, the implementation of the affordable housing policy is facing several problems. One crucial problem is that the current policy cannot effectively identify high-income applicants who are not qualified to apply for affordable housing. Based on the theory of incentive mechanism design, this paper reveals that the current allocation institution has no incentive compatibility. To remedy this shortcoming, a new model for the management of affordable housing is established. Finally, an example is given to show how the proposed model can help improve the overall process of managing the allocation of affordable housing in China.

Research highlights
► Establishes a new incentive compatible model for the allocation of Chinese affordable housing.
► Points out that the size of affordable units is an important decision vector for determining whether the policy is incentive compatible.
► Illustrates that allowing successful applicants to purchase affordable units larger than that allowed by their permits is incompatible with the incentive model.
► Six specific recommendations about improving the Chinese affordable housing policyare suggested in the conclusion section.