Exploring Policy Feasibility Using Social Simulation Games: A Case Study of Floor Area Ratio Trading in China

This is the authors' abstract. We don't add key points for this paper.

Floor area ratio (FAR), the ratio of a building's total floor area to its land area, is a critical urban planning metric. The FAR control, a government-regulated mechanism for land resource allocation, plays a crucial role in balancing private and public interests. However, rigid administrative controls often lead to inefficiencies, suggesting that market-oriented FAR trading could improve fairness and resource allocation. This study employs a role-playing simulation game to examine the feasibility of FAR trading as a policy tool. Participants, acting as real estate developers and FAR bank intermediaries, engaged in FAR transactions under symmetric information conditions. Results indicate that market-driven FAR trading can increase FAR utilization by 29%, reduce average housing prices by 3.8%, and optimize land value distribution. The findings highlight the potential of market mechanisms to complement traditional administrative controls in urban planning.