Sharing, Giving or Reselling: An Economic Analysis

Abstract

We consider the non-linear properties \ and boundaries in the three forms of sharing, gift, \ and reselling economy. We decode the economic \ rationality and marketplace mechanisms in today’s \ ever booming sharing/gifting/reselling networks. \ We contribute to the fundamental economics literature \ by decomposing a merchandise into two \ parts: the ownership good and the detached good. \ The ownership good can be utilized or shared \ by the owner. The detached good can either be \ given as a gift or be resold for an income. The \ separation is bounded by considering the estimated \ finite life of the good and a future time stamp \ of detachment. We consider owner’s holding cost, \ various transaction costs, rewards, as well as the \ incentive mechanism from the network. We find \ that there exist various conditions when certain \ ownership form is more preferred to the others. \ Our results also indicate that governmental and \ marketplaces’ incentive policies play an important \ role when consumers make decisions among the \ three economic forms and consequently adjusting \ the total social welfare.