B2C car-sharing services: Sharing mode selection and value-added service investment

Abstract

This work investigates the sharing mode selection strategy of an original equipment manufacturer (OEM) and the value-added service investment strategy of a business-to-consumer car-sharing platform. The OEM has three sharing modes, i.e., Mode N, only selling shared cars to the platform, Mode B, selling shared cars to the platform and providing the car-sharing services by itself, and Mode A, selling shared cars to the platform and consigning the platform as an agent to manage its shared cars. The platform decides whether to invest in value-added services. Some important findings are obtained. Regardless of the platform’s value-added service investment and the commission rate, for a low fixed investment cost, the OEM should select Mode B if the offline operating cost is relatively low, and select Mode A otherwise. For a high fixed investment cost, the OEM should select Mode N if the commission rate is relatively high and the offline operating cost is moderate, select Mode B if the commission rate is relatively high and the offline operating cost is relatively low, and select Mode A if the commission rate is relatively low or the commission rate and the offline operating cost are both relatively high. Additionally, the commission rate and the offline operating cost can significantly affect the platform’s profit. The value-added services decrease the OEM’s demand but increase the profits of both the OEM and the platform. Two extensions are considered, including the change in the power structure of the supply chain and the free-riding effect of the OEM.