Peer-to-Peer Sharing of Private Goods: Sellers’ Response and Consumers’ Benefits

We study how the presence of consumers’ peer-to-peer sharing option in addition to exclusive ownership affects sellers’ pricing and product design decisions, as well as consumers’ benefits. We identify the conditions in which a seller would accommodate or hinder sharing by pricing the product appropriately. The seller’s profit can be enhanced by accommodating sharing when consumer valuation heterogeneity is neither too high nor too low. Second, sharing does not always improve consumers’ access to goods, and consumers’ access is the most constrained in product categories of medium intrinsic value. Third, existing consumers who seek exclusive ownership may end up being worse off in markets where, without the sharing option, the seller would price the product such that sharing consumers could afford to own the product. Finally, sharing enhances the seller’s incentive to improve product quality in markets where sharing consumers cannot afford to own the product if sharing is precluded.