Implications of peer-to-peer product sharing when the selling firm joins the sharing market

Abstract

In peer-to-peer product sharing markets, the consumers, who own some products but do not fully utilize them, may share their products with some renters who do not own the products. In this paper, we consider a peer-to-peer product sharing problem, in which a firm that sells a product in a selling market may also directly share the product with the consumers. There are two types of consumers with high and low usage levels of the product. They may (1) buy the product to become an owner, and rent it out when they do not use it; (2) not buy the product but be a renter to rent the product for usage; or (3) neither buy nor rent the product. By analyzing a novel model, we study the effects of the firm's direct involvement in the product sharing and the firm's strategic decision of the product quality on equilibrium outcomes. We find that the firm will join the sharing market only when the proportion of high-usage consumers and the cost of joining are relatively low. When the firm can strategically decide the product quality, it is optimal for the firm to improve the product quality when it joins the sharing market. Moreover, we derive the results on how the selling price, selling quantity, sharing price, and the numbers of product owners and renters change when the firm joins the sharing market, and generate strategic and economic implications of the research findings.