Business Model Choice under Right-to-Repair: Economic and Environmental Consequences

45 Pages Posted: 19 Jan 2022

Date Written: January 18, 2022

Abstract

Right-to-Repair (RTR) regulations require producers to design easy-to-repair products and supply necessary information and parts for consumers to independently undertake repairs. While these regulations aim to prolong product lifetimes through repairs, increase secondhand use, and reduce waste; the ease of access to proprietary information and spare parts can have unintended consequences. For example, they may facilitate cloning by third parties. The increased risk of cloning under RTR may, in turn, encourage producers to reconsider their business model choices between ownership and non-ownership models (e.g. leasing). In this paper, we analyze the effect of RTR on business model choice, and the implications for producers, consumers, and the environment. We identify the conditions under which RTR may motivate producers to retain ownership of products and bear responsibility for repairs to avoid competition from secondary markets and third-party clones. We find that RTR regulations may indeed lead to a lower environmental impact for some products. However, for a wide range of product types, these regulations may result in a “lose-lose" situation for producers and the environment, while also decreasing consumer surplus and potentially curtailing producers' incentives to innovate.

Keywords: Right to Repair, Circular Economy, Leasing, Selling, Ownership, Circular Business Models

Suggested Citation

Gulserliler, Ece and Atasu, Atalay and Van Wassenhove, Luk N., Business Model Choice under Right-to-Repair: Economic and Environmental Consequences (January 18, 2022). INSEAD Working Paper No. 2022/05/TOM, Available at SSRN: https://ssrn.com/abstract=4011640 or http://dx.doi.org/10.2139/ssrn.4011640

Ece Gulserliler

affiliation not provided to SSRN

Atalay Atasu

INSEAD ( email )

Boulevard de Constance
77305 Fontainebleau Cedex
France

Luk N. Van Wassenhove (Contact Author)

INSEAD ( email )

Boulevard de Constance
77 305 Fontainebleau Cedex
France
(33) (0)1 60 72 42 66 (Phone)
(33) (0)1 60 72 40 49 (Fax)

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