Thursday 8 December – from 1:15pm to 2:15pm

Self-cannibalization of durable goods with sharing: a producer perspective

With Huihui CHI Post-doctoral Researcher emlyon business school

Abstract:

Facilitated by various online platforms, costs of sharing and selling used products have become almost zero. This phenomenon has created economic competition between new product sellers and those offering shared and used products. We study the economic ramifications of a monopolistic provider’s self-cannibalization problem when products in the secondary market can re-enter the market to compete with the products in the primary market. We consider a two-stage game in which a provider sells new products in both stages while shared and used products may enter the market only in the second stage. Our model includes owners’ holding costs and revenue from sharing. We identify the market equilibrium of this two-stage game and provide managerial implications for product markets with value depreciation, represented by automobiles, and value appreciation, represented by real estates. We show that despite the many similarities between Airbnb and Uber, value appreciation and depreciation imply very different competition scenarios for the product provider. Our results highlight the dynamics of price/quantity equilibria in various product-market setups and provide managerial insights for providers of durable goods.

Registration, please contact robin@em-lyon.com

📍 The seminar will take place at emlyon business School (Ecully campus) – Amphi 1076 Ecully campus