Peer-to-Peer Short-Term Sharing on the Rental Platform

Abstract

Peer-to-peer (P2P) rental markets connect independent owners and price sensitive renters. Examples of P2P rental platform include home sharing, such as Airbnb and Ma Yi Duan Zu, and carsharing, such as Uber and Didi. The platform gains profit by asking owners and renters to pay the commission rates. Owners decide whether to share their durable goods, and if so, how much time to share. In this paper, we study the short-term sharing behavior and decision making process in the P2P rental markets. Specifically, we consider two settings: owner makes the rental price decision; and the platform makes the rental price decision. The former one applies to the home sharing industry, while the latter one applies to the carsharing industry. In addition, we consider two market conditions: supply shortage case (supply is less than demand); and supply surplus case (supply is larger than demand). We show that, platform earns a higher profit under supply surplus (or shortage) case if the potential owner ratio is high (or low). In addition, we show that, under supply shortage case, owner’s optimal earnings and platform’s optimal profit do not change when we compare the setting where owner makes pricing decision with the setting where platform makes pricing decision. Last, we numerically illustrate how the social welfare changes with respect to the owner’s ratio. We find that it is first decreasing, then increasing, and finally decreasing in owner’s ratio.

Keywords

P2P market / price / commission rate / bilateral platform / sharing economy

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