Reducing environmental impact through shared ownership: A model of consumer behaviour

We propose a simple model to study the conditions under which consumers prefer to purchase a good in coalition rather than individually. To identify those conditions, we study the full parameter space that defines the characteristics and preferences of heterogeneous consumers, the characteristics of the good, and the characteristics of a public service that offers the same services as the good. We find that shared ownership emerges only under niche conditions, for relatively lower income consumers with relatively higher demand. Furthermore, shared ownership is more likely to emerge if the shared good is relatively small and can be purchased in small coalition with lower coordination costs. Results are relevant to design sustainable consumption policies as they show that the diffusion of shared goods reduce the net number of goods in an economy, and therefore their environmental impact. However, we do not find any impact of shared ownership in reducing inequality in accessing goods. We show that policies that reduce the relative price of the shared purchase can accelerate the transition to a more sustainable shared consumption.

Keywords: Shared ownership, Consumer coalitions, Sustainable consumption

JEL Classification: D16, Q57, D81, D85