New Publication on Sharing Markets by Prof. Weber
© 2018 EPFL
Recent results on “The Advent of the Sharing Culture and its Effect on Product Pricing” by Prof. Weber and his former student Maryam Razeghian have been accepted for publication by the Elsevier journal Electronic Commerce Research and Applications (5-year Impact-Factor: 3.181). The authors’ research examines the effect of shifts in the sharing culture on firms’ incentives to compete with a peer-to-peer sharing market through purchase options or rental offers (or both).
Abstract
Empirical observations suggest that consumers' propensity towards sharing varies with culture and the individuals' socio-demographic characteristics. In an economy with overlapping generations of heterogeneous consumers, we study optimal dynamic selling by a durable-goods monopolist in equilibrium. Feasible dynamic pricing strategies include second-degree price discrimination offering intertemporal consumption bundles in the form of rental and/or purchase options. We find that as the population's peer-trade propensity increases, possibly due to a cultural shift from private ownership to collective consumption, the durable-goods monopolist's optimal strategy shifts from unbundling (offering exclusively rentals), via mixed bundling (offering the options of rental and purchase side-by-side), to pure bundling (offering purchase only). We find that an increase in peer-trade propensity has an ambiguous effect on the firm's profit. Cultural shifts from low to high peer-trade propensity may be delayed by a firm's attempts to artificially disable sharing markets by offering overly low rental rates. However, beyond a certain threshold of peer-trade propensity, the firm actually prefers a faster cultural transition to an access-based economy. The underlying reason is that the asset base of a sharing economy ultimately depends on the firm's output, so that a portion of the available rents can be captured by the durable-goods monopolist.
Links
- New Results on Sharing Economy Presented at HICCS 51, EPFL, February 2018
- New Results on Sharing Economy Presented at HICCS 50, EPFL, January 2017
- New Results on Sharing Economy Presented at HICCS 49, EPFL, February 2016
- News Release on the Sharing Economy (HICSS 48), EPFL, January 2015
- News Release on Collaborative Consumption, EPFL, July 2014
Razeghian, M., Weber, T.A., (2018) “The Advent of the Sharing Culture and its Effect on Product Pricing,” Electronic Commerce Research and Applications, forthcoming. [DOI 10.1016/j.elerap.2018.06.001] [Download]