Sharing the Path to Climate Change Mitigation: Sustainable CO2 Emission Reduction Through Product-Sharing Economy Platforms

Xiang Gong | Yulin Fang | Xiaoxiao Liu | Angela Lu

Mar 04. 2025

Key Takeaways

This study examines how product-sharing platform entry (i.e., Zhuanzhuan entry) influences CO₂ emissions contingent on the degree of government support and media coverage.
Zhuanzhuan entry significantly reduces CO₂ emissions by facilitating pragmatic legitimacy for secondhand transactions, thereby redirecting idle products away from the solid waste landfill and incineration in decreasing CO₂ emissions.
Zhuanzhuan entry significantly reduces CO₂ emissions by establishing cognitive and moral legitimacy for secondhand transactions, thereby promoting various carbon emission reduction behaviors (e.g., workplace energy conservation, new energy vehicle purchases, and public transportation use).
Government support and media coverage strengthen the relationship between Zhuanzhuan entry and CO₂ emission, as regions with stronger government support and broader media coverage exhibit a greater reduction in CO₂ emission following Zhuanzhuan entry.
Technology-driven, bottom-up business models have the potential to complement government-driven, top-down decarbonization policies in mitigating global climate change.
Product-sharing platforms enhance the efficient use of idle products and reduce the carbon footprints and emissions in collaborative consumption, thus serving as an actionable bottom-up decarbonization strategy for mitigating the global emergency of climate change.

Source Publication: Xiang Gong, Yulin Fang, Xiaoxiao Liu, Angela Lu, Zhenxin Xiao. “Sharing the Path to Climate Change Mitigation: Sustainable CO₂ Emission Reduction Through Product-Sharing Economy Platforms.” SSRN Working Paper, December 16, 2024.

Background and Research Question.

Climate change is one of the most formidable challenges of the 21st century. The Paris Agreement compels nations to amplify their efforts in reducing carbon dioxide (CO₂) emissions and collaborate in addressing this global climate crisis. In the effort to mitigate climate change, product-sharing platforms (e.g., OfferUp, Poshmark, and Zhuanzhuan) present a compelling bottom-up approach, leveraging the collaborative consumption of idle resources to optimize operational efficiency and reduce CO₂ emissions. This leads to our research question: To what extent do product-sharing platforms influence CO₂ emissions in local markets?

Method

We leverage a quasi-experimental setting by examining the staggered entry of Zhuanzhuan, China’s most popular product-sharing platform that expanded its operations to various cities at different times. Founded in Beijing, Zhuanzhuan extended its services nationwide between 2015 and 2017. This setup allows us to use a difference-in-differences (DID) design to investigate whether Zhuanzhuan’s entry into a specific city reduces CO₂ emissions compared to other comparable cities that have not yet legalized Zhuanzhuan operations. We constructed a nationwide city-year-level panel dataset, combining Zhuanzhuan entry and CO₂ emission data for 335 Chinese cities from 2010 to 2019 (covering two 5-year periods before and after Zhuanzhuan’s initial entry).

Results

Using a DID analysis, we find that Zhuanzhuan entry leads to a decrease in CO₂ emissions, a 10% increase in entry supply will lead to a statistically 0.42% decrease in annual CO₂ emissions. We estimate that this effect translates to a total of an annual reduction of 44.45 million tons in CO₂ emissions in 335 Chinese cities, which is equivalent to an economic value of $2.27 billions and accounts for about 0.013% of the total GDP in China.

Meanwhile, the mechanism tests show that Zhuanzhuan entry reduces CO₂ emissions by enhancing the pragmatic legitimacy of idle products away from the solid waste stream (i.e., pragmatic effect) and activating the cognitive and moral legitimacy of performing broader emission reduction behaviors (i.e., moral effect).

Finally, the moderation tests indicate that government support and media coverage strengthen the effect of Zhuanzhuan entry on CO₂ emissions, suggesting that CO₂ emissions reduce more in regions with higher government support and broader media coverage after Zhuanzhuan entry.

Implications

Our findings provide guidance to central governments on how to properly adjust their climate change mitigation policy by leveraging the bottom-up decarbonization strategy to reduce CO₂ emissions. Product-sharing platforms provide a technology-driven bottom-up business model for reducing CO₂ emissions and is especially actionable and meaningful for China—a nation with the world’s largest population and nearly 30% of global CO₂ emissions.

Our findings also offer guidance to local governments, emphasizing the need to establish mature formal and informal institutions that enhance the sociopolitical legitimacy of product-sharing markets, particularly in regions where government support and media coverage lag behind platform development. For instance, local governments are encouraged to leverage the legal system to develop regulatory policies and establish trading intermediaries for product-sharing markets. Furthermore, they are advised to utilize the media system to expand media coverage of idle transactions and raise public awareness of product-sharing markets.