Impact of the P2P resale market on supplier encroachment under the trade-in program

While supplier encroachment has been extensively studied, existing research has largely overlooked two important market elements: the segment of used products owners and the peer-to-peer (P2P) resale market. We bridge this gap by building game-theoretic models featuring a retailer who distributes its supplier’s products to both new customers and existing owners through a trade-in program. Additionally, we incorporate a P2P resale platform that permits direct used-good exchanges between new consumers and owners. The supplier’s encroachment strategies and the P2P resale market’s effects are investigated. Our research indicates that the supplier’s optimal strategy can be either partial encroachment on new customers (Strategy N) or full encroachment on both segments (Strategy B). Furthermore, the supplier systematically favors Strategy B over Strategy N. The owner ratio, new product durability and the P2P platform’s commission rate serve as key moderators, capable of either amplifying or diminishing the supplier’s motivation to encroach and the resulting positive spillovers. Intriguingly, when the platform commission rate meets certain thresholds, Strategy N invariably enhances the retailer’ profitability. The emergence of the P2P resale market consistently reduces the supplier’s profitability and dampens encroachment incentives. Yet, it can mitigate the supply chain double marginalization effects and enhance the retailer's sales, thereby benefiting both the retailer and the overall supply chain when encroachment occurs.