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Business modes in the sharing economy: How does the OEM cooperate with third-party sharing platforms?

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  • Li, Yongjian
  • Bai, Xuanming
  • Xue, Kelei

Abstract

The sharing economy has changed not only the purchasing and use behaviour of consumers but also the operating mode of original equipment manufacturers (OEMs). For OEMs, the sharing economy represents a challenge and an opportunity. In the car market, some OEMs (e.g., General Motors and Toyota) choose to cooperate with peer-to-peer (P2P) sharing platforms, while others (e.g., Nissan and Haima) choose to work with business-to-consumer (B2C) sharing platforms. This paper develops an analytical framework to study how the OEM selects business modes under the sharing economy. Considering participation concerns inherent in the sharing economy, including renters' perceived value of shared products and owners’ maintenance costs, which depend on the marginal cost of products, we first study how the profit-maximising sharing platforms of the P2P and B2C modes affect the OEM. Then, we analyse the mode decision of the OEM. We find that the OEM should choose to cooperate with the B2C platform if the value perception factor is higher or the marginal cost is lower. If the value perception factor is in the middle range and the marginal cost is higher, the OEM should choose the P2P platform. The OEM should not cooperate with any sharing platforms if the value perception factor is lower and the marginal cost is higher.

Suggested Citation

  • Li, Yongjian & Bai, Xuanming & Xue, Kelei, 2020. "Business modes in the sharing economy: How does the OEM cooperate with third-party sharing platforms?," International Journal of Production Economics, Elsevier, vol. 221(C).
    • Handle: RePEc:eee:proeco:v:221:y:2020:i:c:s0925527319302774
    DOI: 10.1016/j.ijpe.2019.08.002
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