Operation strategy under additional service and refurbishing effort in online second-hand market

Man XU, Wansheng TANG*, Chi ZHOU

*Corresponding author for this work

Research output: Journal PublicationsJournal Article (refereed)peer-review

9 Citations (Scopus)

Abstract

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.

Original languageEnglish
Article number125608
Number of pages18
JournalJournal of Cleaner Production
Volume290
Early online date6 Jan 2021
DOIs
Publication statusPublished - 25 Mar 2021
Externally publishedYes

Bibliographical note

This work is supported by the National Natural Science Foundation of China (No. 71771164), Humanity and Social Science Youth Foundation of Ministry of Education of China (No. 17YJC630232), and Scientific Research and Development Program Foundation of Hebei University of Economics and Business (No. 2020PY03).

Keywords

  • Add-on service
  • E-trading platform
  • Environment
  • Refurbishing effort
  • Reputation
  • Second-hand product market

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