Strategic Durability with Sharing Markets

Sustainable Production and Consumption, Vol. 19, pp. 79--96.

18 Pages Posted: 24 Sep 2016 Last revised: 12 Apr 2019

See all articles by Maryam Razeghian

Maryam Razeghian

Ecole Polytechnique Federale de Lausanne - MTEI

Thomas A. Weber

Ecole Polytechnique Federale de Lausanne - MTEI

Date Written: February 15, 2019

Abstract

Electronic sharing markets are contributing to a paradigm shift, from consuming products to accessing products. This paper studies the effects of sharing markets on the prices for new products and on product design in terms of durability. In a dynamic economy with overlapping generations, consumers take strategic purchasing decisions, anticipated by a durable-goods monopolist. Without sharing, the optimal durability increases in the production cost. For low-cost products, a producer prefers to limit durability, effectively disabling a secondary sharing market. The presence of sharing never decreases the incentives to provide durability thus contributing to sustainable product design.

Keywords: Collaborative Consumption, Durability, Peer-to-peer Markets, Planned Obsolescence, Sharing Economy

JEL Classification: C72, D11, D23, D61

Suggested Citation

Razeghian, Maryam and Weber, Thomas A., Strategic Durability with Sharing Markets (February 15, 2019). Sustainable Production and Consumption, Vol. 19, pp. 79--96.. Available at SSRN: https://ssrn.com/abstract=2842550 or http://dx.doi.org/10.2139/ssrn.2842550

Maryam Razeghian

Ecole Polytechnique Federale de Lausanne - MTEI ( email )

Odyssea
Station 5
Lausanne, 1015
Switzerland

Thomas A. Weber (Contact Author)

Ecole Polytechnique Federale de Lausanne - MTEI ( email )

Odyssea
Station 5
Lausanne, 1015
Switzerland
+41 (0)21 693 01 41 (Phone)
+41 (0)21 693 00 20 (Fax)

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