Optimal strategy of a customer-to-customer sharing platform: Whether to launch its own sharing service?

Abstract

As the sharing economy is increasingly growing, various sharing business models have been widely adopted in practice. Some sharing platform firms provide their self-owned products in the market operating in a B2C (business-to-customer) sharing model in addition to the original customer-to-customer (C2C) sharing model. In this study, we develop an analytical framework to examine whether a C2C sharing platform firm launches its own sharing service in both a monopoly market and a supply chain setting. Customers in the market are naturally grouped into product owners and renters. We show that the platform firm does not always choose to launch the B2C sharing service, which significantly depends on the proportion of product owners of the C2C sharing product, the consumer acceptance level of the platform firm’s sharing product and the corresponding marginal production cost. We also find that the introduction of the B2C sharing service will always increase total consumer surplus and social welfare. Furthermore, we further investigate whether the platform firm launches the sharing service by offering its own product or procuring it from an upstream supplier, and extend our analysis to a N-period framework and demonstrate that our results are robust.