Peer-to-Peer Rental Markets in the Sharing Economy
Will the sharing economy create long-run economic value? We develop a new dynamic model of peer-to-peer Internet-enabled rental markets for durable goods in which consumers may also trade their durable assets in (traditional) secondary markets, transaction costs and depreciation rates may vary with usage intensity, and consumers are heterogeneous in their price sensitivity and asset utilization rates. We characterize the stationary equilibrium of the model. We analyze the welfare and distributional effects of introducing these rental markets by calibrating our model with US automobile industry data and 2 years of transaction-level data we have obtained from Getaround, a large peer-to-peer car rental marketplace. Our counterfactual analyses vary marketplace access levels and matching frictions, showing that peer-to-peer rental markets change the allocation of goods significantly, substituting rental for ownership and lowering used-good prices while increasing consumer surplus. Consumption shifts and economic impact are significantly more pronounced for below-median income users, who also provide a majority of rental supply. Our results also suggest that these below-median income consumers will enjoy a disproportionate fraction of eventual welfare gains from this kind of ‘sharing economy’ through broader inclusion, higher quality rental-based consumption, and new ownership facilitated by rental supply revenues.