Collaborative strategies in the product-sharing market considering manufacturer's capital entry

Abstract

Digital technology and online platforms have enabled large-scale business-to-consumer (B2C) sharing of normalized products. Recently, B2C sharing platforms have also become very popular. The impact of B2C sharing on traditional manufacturers can be very significant. With increased competition on the business end, many manufacturers (e.g., BYD and Didi; FAW and T3) have accessed the sharing market to provide customized products and technology services in addition to outright sales to platforms. This paper studies a capital-constrained sharing platform and manufacturer's optimal collaborative strategy in the sharing market and the economic implications of their collaboration. We propose a decomposition framework to establish three capital collaborative strategies based on a non-collaborative strategy (N-with-C), which is associated with different levels of the platform's capital and the manufacturer's capital entry. The three collaborative strategies are physical capital collaboration without service capital constraints (P-without-SC), physical capital collaboration with physical and service capital constraints (P-with-SC) and physical and service capital collaboration with physical and service capital constraints (PS-with-SC). We employ a game-theoretic analytical model for our analysis. Our results show that (i) the choice of a certain collaboration strategy depends on the platform's and manufacturer's decisions and how such interaction is affected by decision parameters such as initial capital level, claim proportion, spillover of product launch quantity, utilization efficiency and service efficiency; (ii) with a decrease in the platform's capital level, the N-with-C strategy gradually ceases to be the sharing platform's strategy choice; and (iii) with the manufacturer's service entry, the manufacturer suffers a complete reversal of the optimal strategy choices when choosing between the non-collaborative strategy and collaborative strategies, but P-with-SC is better than non-collaboration under a higher claim proportion and the sharing platform always prefers to collaborate. These results suggest that an increasing asymmetry of capital input and control rights influences the level of collaboration between the sharing platform and manufacturer.