Business Models in the Sharing Economy: Manufacturing Durable Goods in the Presence of Peer-to-Peer Rental Markets

Business fashions that offer get right of entry to to property in preference to switch possession of products have turn out to be an crucial enterprise trend, representing a venture for incumbent firms. This paper analyzes the interplay of a peer-to-peer (P2P) apartment marketplace and a producer of long lasting goods, and highlights the crucial position of purchaser heterogeneity in utilization prices in figuring out which enterprise version might be desired through the producer. The advent of a P2P apartment marketplace creates an equalizing effect, which ends up in purchases from low-utilization clients. P2P leases act as a discrimination device, permitting the producer to section clients and extract a bigger fraction of surplus, which would possibly harm clients. The producer is higher off with P2P leases whilst the heterogeneity in utilization prices is intermediate, while the clients are higher off with P2P leases whilst the heterogeneity is adequately excessive. This paper examines exclusive enterprise fashions which include the producer with best income, with leases further to income (the “twinorganization), with its very own P2P leases platform along income (the “P2P-sponsoring” organization), and with a blended shape wherein the producer competes in opposition to P2P leases through introducing its very own direct leases (the “twin-plus-P2P” organization). Consumer heterogeneity in utilization prices performs a essential position in enterprise version outcomes. When utilization prices and heterogeneity in utilization prices are sufficiently massive, the producer is higher off presenting income and facilitating a P2P apartment marketplace. In contrast, if heterogeneity in utilization prices is simply too low, the producer prefers to provide best income. If heterogeneity is simply too excessive however utilization prices are beneathneath a threshold, the producer prefers to function as a twin organization that gives each income and leases at once to clients. If P2P leases are unavoidable, introducing its very own leases to compete in opposition to P2P leases won’t be the excellent method for the producer below sure conditions. Overall, opposite to what will be expected, the producer has an incentive to facilitate P2P leases in a massive kind of cases.

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