Managing and Accelerating the Circular Economy Transitions within the Construction Value Chain Using Network Governance and Game Theory Systems Perspectives

The fragmented nature of the construction industry has hindered its transition toward circular economy (CE) practices. While game theory (GT) has been successfully applied to support the strategic decisions of CE transitions in other sectors, CE-GT models in the construction domain remain extremely limited. This paper addresses two research questions: (1) how are CE network governance activities currently modeled using GT across domains? (2) How can such models be transferred and adapted to solve strategic interactions within the construction value chain in a manner that enables CE practices to emerge as equilibrium outcomes? These questions are driven by the need to reorganize the construction value chain’s decision-making environment to better align with CE principles. To answer these questions, the paper adopts a mixed-methods approach combining deductive content analysis with network analysis. Findings show that market creation games, primarily based on Stackelberg models, are most common and are used for CE pricing mechanisms and profit determination. Evolutionary games follow in frequency, typically applied to evaluate macroscale policies and sociocultural changes. Despite the diversity of models identified, most have been developed for manufacturing-oriented value chains, revealing a need for adaptations to reflect the unique characteristics of the construction sector, such as project-based operations, immobility, uncertain demand, fragmentation, and assembly processes. Several gaps were identified, including the need for modeling workforce education, skill development, and improved integration of policy formulation and implementation in CE transitions. Alongside the proposed adaptations to GT models for the construction sector, future research recommendations include incorporating discount factors, consumption decisions, and learning algorithms to enhance model accuracy and decision-making. This study contributes to the body of knowledge by providing a conceptual framework for integrating GT models into network governance processes, supporting more effective decision-making and policy development for CE implementation within the construction value chain.