EXPRESS: To Cooperate or Not? A Finite-Capacity Manufacturer’s Decision to Enter the Sharing Market

Recently, more manufacturers have embraced peer-to-peer product sharing by complementing their traditional sales channels with direct cooperation with sharing platforms to supply products for rental. Unlike prior studies, this paper considers a manufacturer with finite production capacity and investigates whether and under what conditions it chooses to cooperate with a sharing platform, as well as how such cooperation affects capacity utilization. We find that cooperation may arise under both high and low capacity regimes, but for fundamentally different reasons. When the commission rate is high, cooperation is driven by scarcity monetization: the manufacturer cooperates when either marginal production cost is high or capacity is limited, as product scarcity can be sustained and sharing-channel revenue is substantial. When the commission rate is low, cooperation becomes a capacity-utilization strategy and occurs only when marginal production cost is low and capacity is sufficiently large, so that the benefit from absorbing idle capacity outweighs sales cannibalization. We further show that cooperation does not necessarily increase the selling price or reduce the rental price, as pricing and allocation responses depend critically on the commission environment. Finally, cooperation is not a universal remedy for capacity waste. It improves capacity utilization only when the sharing channel effectively absorbs excess capacity under a low commission rate. In contrast, when cooperation is driven by scarcity preservation under a high commission rate, its ability to reduce idle capacity is limited. Moreover, the per-unit idle cost plays an asymmetric role: it discourages cooperation under scarcity-driven regimes but encourages cooperation under capacity-utilization regimes.