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Title

COLLABORATIVE CONSUMPTION: PROFITS, CONSUMER BENEFITS, AND ENVIRONMENTAL IMPACTS

Creator

Supangkat, Hendrarto Kurniawan

Date

2014, 2014-05

Description

With increasingly connected consumers and technological advancement, peer- to-peer sharing is emerging as a consumer-led initiative, which is...
Show moreWith increasingly connected consumers and technological advancement, peer- to-peer sharing is emerging as a consumer-led initiative, which is aimed to exploit slack capacities and lower the cost of consuming private goods. Sharing is praised for its potential bene ts of improving consumer access, consumer surplus, and environmental impact. On the other hand, sharing may possess credible threats to producers because of cannibalization and reduced sales quantity. This thesis is composed of three papers on the subject of peer-to-peer sharing of durable goods, e.g., cars, bikes, gadgets, and household appliances. The rst paper studies pricing and product design decisions of a single-product monopolist in a market. We identify the conditions under which a rm would accom- modate or hinder peer-to-peer sharing by pricing the product appropriately. We nd that the rm's pro t can be enhanced only when the consumer valuation heterogene- ity is neither too high nor too low, and the product's intrinsic value is su ciently high. In addition, contrary to the conventional wisdom, we show that sharing does not always improve consumer access to products. Furthermore, some consumers may end up being worse o . Finally, we nd that social sharing may enhance or impede product innovation, depending on consumer heterogeneity and the size of sharing groups. In the second paper, we study whether social sharing will encourage or discour- age product di erentiation. We nd that the two ways of expanding the market, one consumer-initiated and one rm-initiated, can be strategic complements or substi- tutes, depending on consumer heterogeneity, group size, product intrinsic value, and cost structure. We characterize such conditions. For example, we show that accom- modating sharing provides the rm a higher incentive to introduce a di erentiated product when the product intrinsic value and consumer heterogeneity are both low, x or are both high. We also extend the study by allowing consumers to endogenously choose their sharing group size, and show that it may enhance or worsen the rm's pro t. The third paper focuses on the environmental impact stemming from produc- tion and consumption, in the presence of peer-to-peer sharing. The product usage of sharing consumers is modeled as a function of capacity congestion and group size. We show that a "danger" zone exists where sharing is pro table for the rm but is not friendly to the environment. When the rm has an in uence on the sharing group size (e.g., by promoting sharing programs in metropolitan areas or college towns), the economic incentive and environmental impact can be aligned. Speci cally, we nd that stronger congestion e ects may induce the producer to promote sharing in larger groups, which in turn results in a more positive environmental impact. Such situations are more likely to occur when the product unit cost is large. Moreover, we characterize conditions under which the rm may prefer heterogeneous networks composed of groups with di erent sizes or social networks with lower homophily, and meanwhile the environmental impact can be improved.
PH.D in Management Science, May 2014
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