Right to Repair: Pricing, Profit, Welfare, and Environmental Implications
49 Pages Posted: 3 Feb 2020 Last revised: 7 Jul 2020
Date Written: January 9, 2020
The "right to repair" 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 and become a subject of contentious debate. Repair advocates argue that such legislation would break manufacturers’ monopoly on the repair market and benefit consumers. They further contend that consumers with the right to repair would no longer buy as many new products or prematurely scrap as many old ones, thereby reducing the environmental impact from both production (e.g., emissions) and disposal (e.g., e-waste). However, many manufacturers dread that the right-to-repair legislation would hurt their bottom line and thus often lobby against it. This paper employs an analytical model to scrutinize these claims. We find that contrary to conventional wisdom, giving consumers the right to repair may boost profit, but in other cases, may lead to lower consumer surplus and/or higher environmental impact. Under the right condition, the right-to-repair legislation can be a "win-win-win" proposition that benefits manufacturers, consumers and the environment alike. Under some other circumstances, though, it may lead to a "lose-lose-lose" outcome that is both socially and environmentally undesirable.
Keywords: repair, durable goods, after-sales service, pricing, consumer surplus, environment
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