Uber Might Buy Me a Mercedes Benz: An Empirical Investigation of the Sharing Economy and Durable Goods Purchase
By Jing Gong (Temple University), Brad N. Greenwood (University of Minnesota) & Yiping Song (Fudan University)
Abstract: In this work, we examine how the introduction of sharing-economy platforms (e.g., Uber, Lift, and Airbnb) affects durable goods purchase. On the one hand, the introduction of such platforms may cannibalize durable goods sales, as they may change the decision making calculus of consumers by offering a lower cost “rental” option in lieu of purchase. On the other hand, such platforms might stimulate purchase, as the presence of these platforms could enhance the value of ownership (because participants may seek to capture the rents associated with participating in the sharing economy). In this study, we resolve this tension using a unique dataset of new vehicle registrations in China. In particular, we exploit a natural experiment, the variation in timing of Uber entry across different locations, to estimate the effect on vehicle purchase. Findings suggest that Uber entry is associated with a considerable increase (8%) in new vehicle ownership, suggesting that consumers are actively changing their stock of held resources in order to capture excess rents offered by these platforms. Further, results indicate that the effect of Uber entry varies considerably across gender, age, and vehicle types.