Does car sharing help reduce the total number of vehicles?

Car sharing has become a non-negligible complement to the existing transportation and is viewed as an environmentally beneficial alternative. In this paper, we develop a game-theoretic model to investigate how the introduction of car sharing has an impact on the market. Our results indicate that car sharing does not always reduce vehicle quantity. Specifically, only when the producing cost and transportation need are below some thresholds and the market size is greater than a threshold, can car sharing decrease the total number of vehicles. Otherwise, the manufacturer can generate a larger profit by increasing its production volume. We also find that the introduction of car sharing always makes the retailer incur loss, but it benefits the manufacturer if the market size is sufficiently large. Finally, our results show that the total number of vehicles does not always increase in sharing service level. In such cases, there is a positive spillover effect: by providing the car-sharing service, the manufacturer generates a larger profit with producing less vehicles, which helps alleviate some urban problems, such as air pollution and congestion.