Pricing and operating strategies for products in the sharing economy

Abstract

The sharing economy represents an emerging consumption mode in which the right to utilize products is obtained via transactions instead of conventional ownership exchange. Thus, the idle period of a product during its life cycle can be minimized to promote environmental protection. This study focuses on the business-to-consumers (B2C) business sharing model, in which products are possessed by a firm and there are general and green consumers in the market, and it investigates the optimal operation strategy for a firm in consideration of both self-operated and third-party sharing platforms. The results show that when both general and green consumers are in the market, adopting a sharing economy business model will dramatically elevate a firm's profits. Moreover, when there are more green consumers than general consumers in the market, firms should adopt a compound operation strategy with both self-operated and third-party platforms. Since consumers would rather obtain a product by sharing to lower product usage, firms can determine whether to adopt the sharing economy business model by determining market demand for a product.