Boosting Sharing Economy: Social Welfare or Revenue Driven?

Product sharing over online platforms, or sharing economy, has become a growing trend and has the potential to mitigate many social problems such as wasted products, idle resources, road congestions, and even greenhouse gas emissions. Despite its quick and successful development so far, there has been a lack of clear understanding about who is a better candidate for boosting sharing economy: governmentlike organizations who care about social welfare, or profitdriven entities who mainly focus on revenue? To investigate this problem, we propose a game-theoretic model among users participating in a sharing platform and analyze the social welfare under different platform pricing strategies. Specifically, we derive tight bounds of social welfare loss of the revenue maximization policy compared to social welfare maximization, and show that revenue maximization leads to more sharing supply and ensures a better quality-of-service to users. We further conduct case studies and show the advantage of sharing over a common platform compared to separated sharing groups. Our numerical results based on real data also show that, when the sharing demand/supply ratio is large, the revenue maximizing policy also achieves optimal social welfare. To the best of our knowledge, we are the first to study social welfare with general user utility functions in sharing economy, and to compare the performance of different pricing policies.