Operation Strategy under Additional Service and Refurbishing Effort in Online Second-Hand Market

Xu Man;Tang Wansheng;Zhou Chi

Abstract / 摘要

   As consumption has increased, the abundance of many second-hand goods has become a thorny problem for consumers, while the improper disposal of used goods poses a considerable threat to the environment. To achieve better recycling of second-hand goods, an increasing number of second-hand trading platform owners have emerged. In this paper, we develop game-theoretic models to study how different operation modes affect the supply chain members’ profits, price-to-performance ratios for consumers, the environment and social welfare. Three types of operation modes are proposed depending on the pricing power and the provider of the service: consignment, resale, and sales-plus-service. We find that under certain conditions, the resale and sales-plus-service modes can yield the greatest profits for the e-trading platform owner and the second-hand product supplier. The consignment mode may not bring the optimal profit to the second-hand product supplier but might offer consumers the best price-to-performance ratio even if the e-trading platform owner’s reputation is low. We also show that the mode is not the best way to sell second-hand goods from the perspective of the environment and that the government should encourage highly reputable e-trading platform owners to undertake sales and services. Moreover, an e-trading platform owner service cost may improve social welfare in the sales-plus-service mode.