Topic:Manufacturer’s Entry in the Product-Sharing Market
Speaker:Lin Tian, Assistant Professor of Marketing, College of Business, Shanghai University of Finance and Economics.
Time:Wednesday, 25 April, 13:30-15:00
Location:Room 217, Guanghua Building 2
Mobile communications technologies and online platforms have enabled large-scale consumer-to-consumer (C2C) sharing of their under-utilized products. A product owner’s self-use values can differ over time, and in a period of low self-use value, the consumer may rent out her product in a product-sharing market. In response to consumer-to-consumer product sharing, many manufacturers (e.g., General Motors, BMW) have entered the product-sharing market to provide their own rental services in addition to outright sales to consumers. This paper develops an analytical framework to study a manufacturer’s optimal entry strategy in the product-sharing market and the economic implications of its entry. Our analysis shows that when C2C sharing has a low transaction cost and the manufacturer’s marginal cost of production is not very high, the manufacturer will find it not optimal to offer its own rental services to consumers. In contrast, when the transaction cost for C2C sharing is high or the manufacturer’s marginal cost of production is high, the manufacturer should offer enough units of the products for rental to squeeze out C2C sharing (in expectation). When the transaction cost for C2C sharing and the manufacturer’s marginal cost are both in the middle ranges, the manufacturer’s rental services and the C2C sharing will coexist, in which case the manufacturer’s entry in the product-sharing market may reduce the total number of units of the product in the whole market but increase the consumer surplus and the social welfare.
Lin Tian, Assistant Professor of Marketing at College of Business, Shanghai University of Finance and Economics. He received his doctoral degree in Management Science from School of Management, Fudan University. His research has been published inMarketing Science, Management Science, Production and Operations Management. His current research interests include the sharing economy, platform based business model, and the operations and marketing interface.
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