Business Model Choice under Right to Repair: Economic and Environmental Consequences (Revision 1 )

Problem Definition: Right to Repair (RTR) regulations require producers to supply necessary information and parts for consumers to independently undertake repairs. Although these regulations intend to prolong the useful life of products through repairs, benefit consumers and the environment; the ease of access to proprietary information and spare parts through RTR can facilitate the infringement of intellectual property rights (IPR) by third parties. The authors analyze whether and when retaining product ownership (instead of selling) helps producers avoid IPR infringement and competition. Considering the business model choice, the authors study the consequences of RTR for producers, consumers, and the environment. Methodology/Results: Using a game-theoretic model, the authors find that RTR regulations can encourage producers to keep ownership if the production cost is low and/or the IPR infringement risk under RTR is significant. As a result, RTR reduces producer profits in many cases. However, it is interesting that producers of high-cost products can benefit from RTR if the risk of infringement of IPR is limited and independent repair options help increase the valuation of new products. Furthermore, RTR can reduce the total environmental impact of products with a high production cost and low use-phase impact. However, for other products, especially those with low production costs, RTR can effectively decrease reuse volumes and hurt the environment. These results also suggest a trade-off between the effects of RTR for the environment and consumers, as well as a potential decrease in product innovation and durability. Managerial and Policy Implications: From a managerial perspective, retaining product ownership appears to be a viable response for firms faced with RTR. From a policy perspective, the impact of RTR goes beyond creating more efficient repair markets. Anticipating strategic producer responses to the risk of IPR violation and competition is crucial in understanding the economic and environmental implications of RTR.