Right to Repair: Pricing, Welfare, and Environmental Implications

Management Science, Forthcoming

103 Pages Posted: 3 Feb 2020 Last revised: 23 Mar 2022

See all articles by Chen Jin

Chen Jin

National University of Singapore (NUS) - Department of Information Systems and Analytics

Luyi Yang

University of California, Berkeley - Haas School of Business

Cungen Zhu

National University of Singapore

Date Written: January 9, 2020

Abstract

The "right to repair" (RTR) movement calls for government legislation that requires manufacturers to provide repair information, tools, and parts so that consumers can independently repair their own products with more ease. The initiative has gained global traction in recent years. Repair advocates argue that such legislation would break manufacturers’ monopoly on the repair market and benefit consumers. They further contend that it would reduce the environmental impact by reducing e-waste and new production. Yet, the RTR legislation may also trigger a price response in the product market as manufacturers try to mitigate the profit loss. This paper employs an analytical model to study the pricing, welfare, and environmental implications of RTR. We find that as the RTR legislation continually lowers the independent repair cost, manufacturers may initially cut the new product price and then raise it. This non-monotone price adjustment may further induce a non-monotone change in consumer surplus, social welfare, and environmental impact. Strikingly, the RTR legislation can potentially lead to a "lose-lose-lose" outcome that compromises manufacturer profit, reduces consumer surplus, and increases the environmental impact, despite repair being made easier and more affordable.

Keywords: sustainable operations, repair, durable goods, after-sales service, pricing, extended producer responsibility, consumer surplus, environmental impact

Suggested Citation

Jin, Chen and Yang, Luyi and Zhu, Cungen, Right to Repair: Pricing, Welfare, and Environmental Implications (January 9, 2020). Management Science, Forthcoming, Available at SSRN: https://ssrn.com/abstract=3516450 or http://dx.doi.org/10.2139/ssrn.3516450

Chen Jin (Contact Author)

National University of Singapore (NUS) - Department of Information Systems and Analytics ( email )

Singapore

Luyi Yang

University of California, Berkeley - Haas School of Business ( email )

545 Student Services Building, #1900
2220 Piedmont Avenue
Berkeley, CA 94720
United States

Cungen Zhu

National University of Singapore ( email )

15 Computing Drive
Singapore, 117418
Singapore

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