Uber Might Buy Me a Mercedes Benz: An Empirical Investigation of the Sharing Economy and Durable Goods Purchase

48 Pages Posted: 20 May 2017 Last revised: 13 Nov 2019

See all articles by Jing Gong

Jing Gong

Lehigh University - College of Business

Brad N. Greenwood

George Mason University - School of Business

Yiping Song

Fudan University

Date Written: May 19, 2017

Abstract

In this work, we examine how sharing-economy platforms affect durable goods purchase. On the one hand, the introduction of such platforms may cannibalize sales, as they may change the decision-making calculus of consumers by offering a lower cost “rental” option in lieu of purchase. On the other hand, such platforms might stimulate purchase, as their presence enhances the value of ownership by allowing participants to capture rents through the sharing economy. We examine this tension using a unique dataset of new vehicle registrations in China. In doing so, we exploit the variation in timing of Uber entry across different locations to estimate the effect on new vehicle purchase. Findings suggest Uber entry is associated with a considerable increase in new vehicle ownership, indicating that consumers are actively changing their stock of held resources in order to capture excess rents offered by these platforms. Further, results indicate that the effect of Uber entry varies considerably across vehicle type.

Keywords: sharing economy, platform, ridesharing, car sales, durable goods purchase, difference in difference

Suggested Citation

Gong, Jing and Greenwood, Brad and Song, Yiping, Uber Might Buy Me a Mercedes Benz: An Empirical Investigation of the Sharing Economy and Durable Goods Purchase (May 19, 2017). Available at SSRN: https://ssrn.com/abstract=2971072 or http://dx.doi.org/10.2139/ssrn.2971072

Jing Gong

Lehigh University - College of Business ( email )

Bethlehem, PA 18015
United States

Brad Greenwood

George Mason University - School of Business ( email )

VA 22030
United States

Yiping Song (Contact Author)

Fudan University ( email )

670 Guoshun Road
Shanghai, 200433
China

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