1308 X.Liang et aL Journal of Cleaner Production 137(2016)1300-1312 occupier is not interested in green retrofit but the owner has the 6.1.The action of the owner when the occupier has the initiative to initiative in the approach,then it can be implemented without the retrofit cooperation of the occupier,as discussed in the previous section. Under this condition,the owner cannot reap certain and direct In a situation where the owner does not want to invest on payback from increased rent AR,but can only obtain uncertain, retrofit,but the occupiers want to,a single occupier does not have long-term,and indirect profit from green retrofit,such as operation enough economic capabilities or influential power to implement cost saving building value increase AVse,and public impact the approach.Therefore,if the active occupiers cannot reach Aps.By contrast,investment and coordination cost Cso are consensus with the reluctant owner and cannot implement retrofit certain,short-term and direct,and are thus considered important by themselves,they can only choose to "vote with their feet,"which by the owner because of the risk-adverse characteristic (Rhoads. raises the turnover cost for the owner C.However,this turnover 2010).The key information can be summarized as follows: cost does not increase significantly because small companies consider cost and location as the dominant factors for building S02+△V9+△P8-9-C2≤0，B222-0 7) selection (Rhoads,2010).If occupiers are interested in green retrofit,they will support it and pay additional rent to the owner to namely. compensate for the additional costs (Fuerst and McAllister,2011). Under this condition,the owner can reap a direct payback from the B8w12≤B8w22 (8) increased rent 4R as compensation for the investment.How- ever,the owner must pay the coordination cost to raise the rent. According to Formula(8),the owner should choose "reluctant to Coordination cost C is proportional to the number of occupiers. retrofit"when the occupier is reluctant to green retrofit. The cost is very high when numerous occupiers,various contracts. The preceding analysis in Formula(8)reveals that,in a single- and different rental periods exist (Rhoads.2010),namely. occupied building.the occupier chooses "reluctant to retrofit" C>>0.The key information can be summarized as follows: regardless of what the owner chooses,and the owner is reluctant to retrofit to guarantee his or her interests.Hence,the Nash Equilib- S9+△Vm+△Rm011+△P--C≤0，-C=0 rium for the owner and the single occupier is "reluctant to retrofit," (9) and "reluctant to retrofit,"respectively.Given that a multi-occupied building is another common occupancy type,a comparative study namely. is discussed in the next section B8R11≤B021 (10) According to Formula (10),the owner should choose "reluctant 6.Retrofit decision for multi-occupied building to retrofit"when the initiative of the occupiers is to engage in green retrofit. Given that each occupier is an independent economic entity in this scenario,the owner must play games with each occupier 6.2.The action of the owner when the occupier is reluctant to individually.The occupiers have similar scales,costs,and benefits, retrofit and thus their decisions should not be significantly different. Therefore,occupiers are considered homogeneous in the game.The If both owner and occupiers are reluctant to green retrofit,then game can be abstracted with two players,namely,owner and ho- it is not implemented.The owner obtains neither cost nor profit, mogeneous occupiers.This study does not focus on the differences of occupiers,and the cooperation and games among occupiers are such that B0.When the occupier is not active in green not included as well. retrofit but the owner is,the approach can be implemented without the cooperation of some reluctant occupiers.If some occupiers Different from single-occupied condition,numerous occupiers cannot reach consensus with the owner,they will move out,which exist in a multi-occupied building.In this condition,occupancy is relatively small scale and has a high turnover rate.Therefore,the results in turnover cost C for the owner.Generally,occupancy owner is dominant in the relationship.Occupiers are powerless in rate and rent per unit increase after green retrofit(Ma et al..2012: Thomas,2010).Thus,even though some occupiers move out negotiation and can only choose to "vote with their feet,"which means relocating to another building.Relocation raises additional because of retrofit,the owner can reap increased rentR from the new occupiers.However,high occupancy rate in the future and costs for occupiers and owner in terms of relocation cost and high rent from a new occupier is an indirect and long-term benefit turnover cost respectively.Table 6 describes these additional costs. for the owner.Other profits of retrofit,including operation cost Other advantages and disadvantages of green retrofit are similar to those of the condition of single-occupied building.The payoff saving S,increased building value AV2,and public impact AP are long term and uncertain.By contrast,the costs of retrofit are matrix for owners and occupiers in multi-occupied buildings is short term and definite.The risk-adverse investor does not want to shown in Fig.5,where the superscript "mo"represents the multi- take challenges to compare uncertain interests with specific costs occupied condition: The key information can be summarized as follows: Based on this adapted matrix,the following scenarios can be investigated to identify the Nash Equilibrium under the multi- S88+△V+△R912+△P--C8-C≤0，B922 occupied condition. =0 (11) Table 6 The variables of decision in multi-occupied building. namely, Stakeholder Variable Definition Driver/Barrier Owner Turnover cost of owner Bow1/4 B2≤B22 (12) Occupier Relocation cost of occupier Boc6 According to Formula(12),the owner should choose "reluctantoccupier is not interested in green retrofit but the owner has the initiative in the approach, then it can be implemented without the cooperation of the occupier, as discussed in the previous section. Under this condition, the owner cannot reap certain and direct payback from increased rent DR, but can only obtain uncertain, long-term, and indirect profit from green retrofit, such as operation cost saving Sso o12, building value increase DVso 12, and public impact DPso 12. By contrast, investment Iso 12 and coordination cost Cso c12 are certain, short-term and direct, and are thus considered important by the owner because of the risk-adverse characteristic (Rhoads, 2010). The key information can be summarized as follows: Sso o12 þ DVso 12 þ DPso 12 I so 12 Cso c12  0; Bso oc22 ¼ 0 (7) namely, Bso ow12  Bso ow22 (8) According to Formula (8), the owner should choose “reluctant to retrofit” when the occupier is reluctant to green retrofit. The preceding analysis in Formula (8) reveals that, in a single￾occupied building, the occupier chooses “reluctant to retrofit” regardless of what the owner chooses, and the owner is reluctant to retrofit to guarantee his or her interests. Hence, the Nash Equilib￾rium for the owner and the single occupier is “reluctant to retrofit,” and “reluctant to retrofit,” respectively. Given that a multi-occupied building is another common occupancy type, a comparative study is discussed in the next section. 6. Retrofit decision for multi-occupied building Given that each occupier is an independent economic entity in this scenario, the owner must play games with each occupier individually. The occupiers have similar scales, costs, and benefits, and thus their decisions should not be significantly different. Therefore, occupiers are considered homogeneous in the game. The game can be abstracted with two players, namely, owner and ho￾mogeneous occupiers. This study does not focus on the differences of occupiers, and the cooperation and games among occupiers are not included as well. Different from single-occupied condition, numerous occupiers exist in a multi-occupied building. In this condition, occupancy is relatively small scale and has a high turnover rate. Therefore, the owner is dominant in the relationship. Occupiers are powerless in negotiation and can only choose to “vote with their feet,” which means relocating to another building. Relocation raises additional costs for occupiers and owner in terms of relocation cost and turnover cost respectively. Table 6 describes these additional costs. Other advantages and disadvantages of green retrofit are similar to those of the condition of single-occupied building. The payoff matrix for owners and occupiers in multi-occupied buildings is shown in Fig. 5, where the superscript “mo” represents the multi￾occupied condition: Based on this adapted matrix, the following scenarios can be investigated to identify the Nash Equilibrium under the multi￾occupied condition. 6.1. The action of the owner when the occupier has the initiative to retrofit In a situation where the owner does not want to invest on retrofit, but the occupiers want to, a single occupier does not have enough economic capabilities or influential power to implement the approach. Therefore, if the active occupiers cannot reach consensus with the reluctant owner and cannot implement retrofit by themselves, they can only choose to “vote with their feet,” which raises the turnover cost for the owner Cmo t21. However, this turnover cost does not increase significantly because small companies consider cost and location as the dominant factors for building selection (Rhoads, 2010). If occupiers are interested in green retrofit, they will support it and pay additional rent to the owner to compensate for the additional costs (Fuerst and McAllister, 2011). Under this condition, the owner can reap a direct payback from the increased rent DRmo ow11 as compensation for the investment. How￾ever, the owner must pay the coordination cost to raise the rent. Coordination cost Cmo c11 is proportional to the number of occupiers. The cost is very high when numerous occupiers, various contracts, and different rental periods exist (Rhoads, 2010), namely, Cmo c11 > > 0. The key information can be summarized as follows: Smo o11 þ DVmo 11 þ DRmo ow11 þ DPmo 11 I mo 11 Cmo c11  0; Cmo t21z0 (9) namely, Bmo ow11  Bmo ow21 (10) According to Formula (10), the owner should choose “reluctant to retrofit” when the initiative of the occupiers is to engage in green retrofit. 6.2. The action of the owner when the occupier is reluctant to retrofit If both owner and occupiers are reluctant to green retrofit, then it is not implemented. The owner obtains neither cost nor profit, such that Bmo ow22 ¼ 0. When the occupier is not active in green retrofit but the owner is, the approach can be implemented without the cooperation of some reluctant occupiers. If some occupiers cannot reach consensus with the owner, they will move out, which results in turnover cost Cmo t12 for the owner. Generally, occupancy rate and rent per unit increase after green retrofit (Ma et al., 2012; Thomas, 2010). Thus, even though some occupiers move out because of retrofit, the owner can reap increased rent DRmo ow12 from the new occupiers. However, high occupancy rate in the future and high rent from a new occupier is an indirect and long-term benefit for the owner. Other profits of retrofit, including operation cost saving Smo o12, increased building value DVmo 12 , and public impact DPmo 12 , are long term and uncertain. By contrast, the costs of retrofit are short term and definite. The risk-adverse investor does not want to take challenges to compare uncertain interests with specific costs. The key information can be summarized as follows: Smo o12 þ DVmo 12 þ DRmo ow12 þ DPmo 12 I mo 12 Cmo t12 Cmo c12  0; Bmo ow22 ¼ 0 (11) namely, Bmo oc12  Bmo oc22 (12) According to Formula (12), the owner should choose “reluctant Table 6 The variables of decision in multi-occupied building. Stakeholder Variable Definition Driver/Barrier Owner Ct Turnover cost of owner BOW1/4 Occupier Cr Relocation cost of occupier BOC6 1308 X. Liang et al. / Journal of Cleaner Production 137 (2016) 1300e1312