Should a Platform Provide Per-Use Rental Services?

Driven by the growing societal emphasis on sustainable consumption, per-use rental channels are being integrated by platforms alongside their traditional standalone resale channels. Motivated by this business practice, this study aims to answer the question: should a platform operating a retail channel introduce a per-use rental channel? To this end, two analytical models are developed. One where the platform only resells the manufacturer's products (the S model) and another where the platform incorporates a per-use rental channel alongside the resale channel (the SR model). We study the channel structure selection of the platform between the S and the SR models. Some important findings are obtained. Firstly, the platform may not always benefit from adding a per-use rental channel and will benefit only if the utility that consumers gain from each usage is high. Secondly, the retail price of the platform will increase in the wholesale price of the manufacturer, but the rental price will not be affected. Lastly, the parameters such as the psychological cost, utility per usage, and maximum usage frequency of customers exert different influence on manufacturer and platform pricing, and the profits of both entities.