The Rise of Recommerce: Ownership and Sustainability with Overlapping Generations

Rubing Li and Arun Sundararajan

Papers from arXiv.org

Abstract: The emergence of the branded recommerce channel - digitally enabled and branded marketplaces that facilitate purchasing pre-owned items directly from a manufacturer's e-commerce site - leads to new variants of classic IS and economic questions relating to secondary markets. Such branded recommerce is increasingly platform-enabled, creating opportunities for greater sustainability and stronger brand experience control but posing a greater risk of cannibalization of the sales of new items. We model the effects that the sales of pre-owned items have on market segmentation and product durability choices for a monopolist facing heterogeneous customers, contrasting outcomes when the trade of pre-owned goods takes place through a third-party marketplace with outcomes under branded recommerce. We show that the direct revenue benefits of branded recommerce are not their primary source of value to the monopolist, and rather, there are three indirect effects that alter profits and sustainability. Product durability increases, a seller finds it optimal to forgo marketplace fees altogether, and there are greater seller incentives to lower the quality uncertainty associated with pre-owned items. We establish these results for a simple two-period model as well as developing a new infinite horizon model with overlapping generations. Our paper sheds new insight into this emerging digital channel phenomenon, underscoring the importance of recommerce platforms in aligning seller profits with sustainability goals.

Date: 2024-05
New Economics Papers: this item is included in nep-dge, nep-ind and nep-pay
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://arxiv.org/pdf/2405.09023 Latest version (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:arx:papers:2405.09023

Access Statistics for this paper

More papers in Papers from arXiv.org
Bibliographic data for series maintained by arXiv administrators ().