Toward Sustainable Construction: Optimizing Carbon Emission Reduction in the Building Supply Chain through Game-Theoretic Strategies, Government Subsidies, and Cost-Sharing Contract

Carbon emission reduction (CER) in the construction industry can aid in achieving the international community’s carbon neutrality target. However, the low motivation of construction enterprises to reduce carbon emissions and the unsatisfactory effect of CER are still unresolved issues. This study aims to address these issues by constructing a building supply chain (BSC) consisting of a developer and a contractor using government subsidies and cost-sharing contracts. The optimal government subsidy and feedback equilibrium strategies of the BSC are examined using a combination of differential game theory and numerical simulations. The findings demonstrate that (1) cost-sharing contracts may enhance developer and contractor profits and building CER, goodwill, and demand without relying on government subsidies; (2) when subsidized by the government, each equilibrium strategy meets or exceeds the performance of the centralized model, with the cost-sharing contract having a negligible effect on the enhancement of each equilibrium strategy; and (3) both the game structure and the positioning of construction enterprises in the BSC are connected to the number of government subsidies. The city of Shenzhen, one of China’s first low-carbon pilot cities, provides a realistic environment for the simulation analysis, with the Block K residential building in Nanshan District serving as a case study. Furthermore, this work contributes to the body of knowledge by proposing a novel CER model for the BSC using differential game theory. The research provides new insights into the role of government subsidies in shaping profit distribution, game structure, and enterprise positioning. Findings demonstrate the value of cost-sharing contracts in improving CER, goodwill, demand, and profits when implemented collaboratively. This advances the theoretical understanding of incentives and strategies for promoting CER in construction.