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

Abstract

Sharing ownership of goods, like cars or drills, used by a single owner for a small fraction of their life-time, can mitigate environmental impacts. But are consumers ready to give up individual property rights on underutilised goods? We propose a simple model to study conditions favouring consumers purchasing a private good in coalition rather than individually. By exploring the model parameter space, encompassing characteristics and preferences of heterogeneous consumers, those of the private good and of a public service that offers the same service of the good, we identify the emergence of shared ownership. It predominantly occurs under niche conditions: among lower-income consumers with above-average demand, especially when the shared good is relatively small and purchasable in small coalitions -- which have lower coordination costs. Shared ownership reduces the net number of goods in an economy and production-related environmental impact, even in the absence of consumers’ sustainability concerns. Policies reducing the relative price of the shared purchase accelerate the transition to a more sustainable shared consumption. However, we do not find any impact of shared ownership in reducing inequality in accessing goods.

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