Idlefish or not? Online platform's strategy of secondhand marketplace introduction in the presence of consumer's uncertain preferences and strategic behavior.

Secondhand marketplace has received a dramatic growth as secondhand trading becomes a sustainable way of life worldwide. We propose a game-theoretical model to explore online retail platform's strategy of secondhand marketplace introduction when facing consumer's uncertain preferences. The platform sells new product for the manufacturer and decides whether to open a secondhand product for consumers to purchase secondhand product. Consumers are strategic in their purchase of new product and secondhand product in two sequential periods. We find that the presence of secondhand marketplace induces the manufacturer to lower the retail price for new product when retail price of secondhand product is low but increase the price otherwise. The secondhand marketplace may benefit the platform when the retail price of secondhand product is moderate, but may harm the platform when the price is low or high, depending on the unit production cost of new product. Interestingly, it is never optimal for the manufacturer when the retail price of secondhand product is substantially low, but may be beneficial otherwise, depending on the unit production cost of new product. Examining the value of secondhand marketplace, it creates a win–win situation for the two parties when the retail price of secondhand product is not low, and improves the consumer surplus under certain circumstances. The extended case of consumer depreciation of secondhand product verifies the robustness of the basic model. [ABSTRACT FROM AUTHOR]