When electric vehicles bump into sharing economy: Consumer's variety seeking in the sustainable transportation

Abstract

The development of electric vehicles incurs the consumer's variety seeking in the sharing economy. In addition to being passengers on the sharing platform, customers can rent electric vehicles from the rental company as ride-hailing drivers, rather than purchasing from the manufacturing firm. In this article, we set up a game-theoretic model to study the customer's variety-seeking behavior in the new frenemy partnership and solve the equilibrium pricing strategy and quality decision for the rental company and the sharing platform. The numerical experiments show that the rental company's price is less influenced by the valuation heterogeneity, but the sharing platform's price is the opposite. Given some real-world examples of product ownership and product usage in sustainable transportation, we discuss the consumer's variety seeking and the company/platform's pricing strategy from both the passenger and driver sides.