Selling or sharing: Business model selection problem for an automobile manufacturer with uncertain information

Abstract

The rapid development of car sharing raises a concerned question: is it a better alternative to car sales? This paper studies a business model selection problem where an automobile manufacturer with uncertain information chooses his strategy from three options: sale only ( SO ), car sharing only ( CO ), and both sale and car sharing ( SC ). A game-theoretic model is built to investigate what are the key factors influencing the introduction of car sharing and how it brings environmental impact. Our results show that both the selling price and car-sharing fee keep invariable regardless of which business model the manufacturer chooses. CO is a dominated strategy. Besides, SC dominates SO when producing cost is either sufficiently low or high, while the opposite is true for a medium producing cost. In addition, only when producing cost is sufficiently high, a win-win outcome emerges: the introduction of car sharing not only increases the manufacturer’s profit, but also reduces total vehicle quantity, which helps alleviate urban congestion. Finally, our results prove that the increase of uncertainty degree benefits the manufacturer when SC is adopted.