The greater the investment, the greater the loss? – Resource traps in Building energy efficiency retrofit (BEER) market

Building Energy Efficiency Retrofitting (BEER) is an important measure to relieve energy pressure, conserve natural resources and promote urban low-carbon transformation. Governments of various countries have invested huge resources to promote the rapid development of BEER market. However, when the amount of resource input exceeds a certain threshold, the market will deviate from the desired state, falling into a resource trap and cutting consumer welfare. This is due to the fact that BEER service providers take advantage of their dominant position in the market and increase their own revenues by enhancing product heterogeneity. To make matters worse, the greater the government's effort, the earlier the resource trap appears and the more resource loss it causes. Incentives and penalties for service providers became necessary to guide the market to cross resource trap. The research in this paper is conducive to promoting the healthy development of the BEER market, conserving natural resources and promoting urban low-carbon transformation.