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.