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In
capitalism Capitalism is an economic system An economic system, or economic order, is a system A system is a group of interacting Interaction is a kind of action that occurs as two or more objects have an effect upon one another. The idea o ...

capitalism
, the sharing economy is a socio-economic system built around the sharing of resources. It often involves a way of purchasing goods and services that differs from the traditional
business model
business model
of companies hiring employees to produce products to sell to consumers. It includes the shared creation, production, distribution, trade and consumption of goods and services by different people and organisations. These systems take a variety of forms, often leveraging information technology (particularly digital platforms) to empower individuals, corporations, non-profits and government with information that enables distribution, sharing and reuse of excess capacity in goods and services.Sutherland, W and Jarrahi, M.H. "The sharing economy and digital platforms: A review and research agenda." International Journal of Information Management 43 (2018): 328-341. There are two main types of sharing economy initiatives: * Non-profit, usually based on the concept of book-lending libraries, in which goods and services are provided for free (or sometimes for a modest subscription). * Commercial, in which a company provides a service to customers for profit.


Origins

The term "sharing economy" began to appear around the time of the
Great Recession The Great Recession was a period of marked general decline (recession) observed in national economies globally that occurred between 2007 and 2009. The scale and timing of the recession varied from country to country (see map). At the time, the ...
, enabling social technologies, and an increasing sense of urgency around global population growth and resource depletion.
Lawrence Lessig Lester Lawrence Lessig III (born June 3, 1961) is an American academic, attorney, and political activist. He is the Roy L. Furman Professor of Law at Harvard Law School and the former director of the Edmond J. Safra Center for Ethics at Harvar ...

Lawrence Lessig
was possibly first to use the term in 2008, though others claim the origin of the term is unknown.
Dariusz Jemielniak Dariusz Jemielniak (born March 17, 1975) is a full professor of management, the head of MINDS (Management in Networked and Digital Societies) department at Kozminski University Kozminski University (formerly known as ''Leon Kozminski Academy of En ...
and Aleksandra Przegalinska credit Marcus Felson and Joe L. Spaeth's academic article "''Community Structure and
Collaborative Consumption Collaborative consumption encompasses the sharing economy In capitalism Capitalism is an economic system An economic system, or economic order, is a system of Production (economics), production, allocation of resources, resource alloc ...
''" published in 1978 with coining the term ''economy of sharing''.


Definition and related concepts

There is a conceptual and semantic confusion caused by the many facets of
Internet The Internet (or internet) is the global system of interconnected computer networks that uses the Internet protocol suite (TCP/IP) to communicate between networks and devices. It is a ''internetworking, network of networks'' that consist ...

Internet
-based sharing leading to discussions regarding the boundaries and the scope of the sharing economy and regarding the definition of the sharing economy. Arun Sundararajan noted in 2016 that he is "unaware of any consensus on a definition of the sharing economy". As of 2015, according to a
Pew Research Center The Pew Research Center is a nonpartisan Nonpartisanism is a lack of affiliation with, and a lack of bias toward, a political party A political party is an organization that coordinates candidates to compete in a particular country's el ...

Pew Research Center
survey, only 27% of Americans had heard of the term "sharing economy". Survey respondents who had heard of the term had divergent views on what it meant, with many thinking it concerned "sharing" in the traditional sense of the term. The term "sharing economy" is often used in an ambiguous way and can imply different characteristics. For example, the sharing economy is sometimes understood exclusively as a
peer-to-peer 200px, A network based on the client–server model, where individual Client (computing), ''clients'' request services and resources from centralized server (computing), servers Peer-to-peer (P2P) computing or networking is a distributed appli ...
phenomenon while at times, it has been framed as a business-to-customer phenomenon. Additionally, the sharing economy can be understood to encompass transactions with a permanent transfer of ownership of a resource, such as a sale, while other times, transactions with a transfer of ownership are considered beyond the boundaries of the sharing economy. One definition of the sharing economy, developed to integrate existing understandings and definitions, based on a systematic review is:
"the sharing economy is an IT-facilitated peer-to-peer model for commercial or non-commercial sharing of underutilized goods and service capacity through an intermediary without transfer of ownership"
While the term sharing economy is the term most often used, the sharing economy is also referred to as the access economy, crowd-based capitalism, collaborative economy, community-based economy,
gig economy Gig workers are independent contractors An independent contractor is a person, business, or corporation that provides good (accounting), goods or Service (economics), services under a written contract or a oral contract, verbal agreement. Unlike e ...
, peer economy, peer-to-peer (P2P) economy,
platform economy The platform economy is economic and social activity facilitated by platforms. Such platforms are typically online sales or technology frameworks. By far the most common type are "transaction platforms", also known as "digital matchmakers". Examples ...

platform economy
, renting economy and on-demand economy, through at times some of those terms have been defined as separate if related topics. The notion of "sharing economy" has often been considered an
oxymoron An oxymoron (usual plural oxymorons, more rarely oxymora) is a rhetorical device In rhetoric, a rhetorical device, persuasive device, or stylistic device is a ''technique'' that an author or speaker uses to convey to the listener or reader a Mean ...
, and a
misnomer A misnomer is a name that is incorrectly or unsuitably applied. Misnomers often arise because something was named long before its correct nature was known, or because an earlier form of something has been replaced by a later form to which the nam ...
for actual commercial exchanges. Arnould and Rose proposed to replace the misleading term "sharing" with mutuality. In an article in ''
Harvard Business Review ''Harvard Business Review'' (HBR) is a general management Management (or managing) is the administration of an organization, whether it is a business, a not-for-profit organization, or government body. Management includes the activitie ...
'', authors Giana M. Eckhardt and Fleura Bardhi argue that "sharing economy" is a misnomer, and that the correct term for this activity is access economy. The authors say, "When 'sharing' is market-mediated—when a company is an intermediary between consumers who don't know each other—it is no longer sharing at all. Rather, consumers are paying to access someone else's goods or services." The article states that companies (such as
Uber Uber Technologies, Inc., commonly known as Uber, is an American mobility as a service Mobility-as-a-Service (MaaS) is a type of service that through a joint digital channel enables users to plan, book, and pay for multiple types of mobility ...

Uber
) that understand this, and whose marketing highlights the financial benefits to participants, are successful, while companies (such as
Lyft Lyft, Inc. develops, markets, and operates a mobile app, offering vehicles for hire, motorized scooters, a bicycle-sharing system, and food delivery. The company is based in San Francisco, California San Francisco (/Help:IPA/English ...

Lyft
) whose marketing highlights the social benefits of the service are less successful. According to
George Ritzer George Ritzer (born October 14, 1940) is an American sociologist, professor, and author who studies globalization Globalization, or globalisation ( Commonwealth English; see spelling differences), is the process of interaction and integrat ...
, this trend towards increased consumer input in commercial exchanges refers to the notion of prosumption, which, as such, is not new. Jemielniak and Przegalinska note that the term sharing economy is often used to discuss aspects of the society that do not predominantly relate to the economy, and propose a broader term collaborative society for such phenomena. The term " platform capitalism" has been proposed by some scholars as more correct than "sharing economy" in discussion of activities of for-profit companies like Uber and Airbnb in the economy sector. Companies that try to focus on fairness and sharing, instead of just
profit motive In economics Economics () is a social science Social science is the branch A branch ( or , ) or tree branch (sometimes referred to in botany Botany, also called , plant biology or phytology, is the science of plant ...
, are much less common, and have been contrastingly described as
platform cooperative A platform cooperative, or platform co-op, is a cooperative A cooperative (also known as co-operative, co-op, or coop) is "an autonomous The federal subject in Russia">Federal subjects of Russia">federal subject in Russia, close to bor ...
s (or cooperativist platforms vs capitalist platforms). In turn, projects like
Wikipedia Wikipedia ( or ) is a free content Free content, libre content, or free information is any kind of functional work, work of art A work of art, artwork, art piece, piece of art or art object is an artistic creati ...

Wikipedia
, which rely on unpaid labor of volunteers, can be classified as commons-based peer-production initiatives. A related dimension is concerned with whether users are focused on non-profit sharing or maximizing their own profit. Sharing is a model that is adapting to the abundance of resource, whereas for-profit platform capitalism is a model that persists in areas where there is still a
scarcity Scarcity as an economic concept "refers to the basic fact of life that there exists only a finite amount of human and nonhuman resources which the best technical knowledge is capable of using to produce only limited maximum amounts of each econo ...
of resources.
Yochai Benkler Yochai Benkler (; born 1964) is an Israeli-American author and the Berkman Professor of Entrepreneurial Legal Studies at Harvard Law School. He is also a faculty co-director of the Berkman Klein Center for Internet & Society at Harvard Universi ...

Yochai Benkler
, one of the earliest proponents of open source software, who studied the
tragedy of the commons In economic science, the tragedy of the commons is a situation in which individual users, who have open access to a resource unhampered by shared social structures or formal rules that govern access and use, act independently according to their s ...
, which refers to the idea that when we all act solely in our self-interest, we deplete the shared resources we need for our own quality of life, posited that network technology could mitigate this issue through what he called '
commons-based peer production Commons-based peer production (CBPP) is a term coined by Harvard Law School professor Yochai Benkler. It describes a model of socio-economic production in which large numbers of people work cooperative A cooperative (also known as co-opera ...
', a concept first articulated in 2002. Benkler then extended that analysis to "shareable goods" in ''Sharing Nicely: On Shareable Goods and the emergence of sharing as a modality of economic production'', written in 2004.


Actors of the sharing economy

There are a wide range of actors who participate in the sharing economy. This includes individual users, for-profit enterprises, social enterprise or cooperatives, digital platform companies, local communities, non-profit enterprises and the public sector or the government. Individual users are the actors engaged in sharing goods and resources through "peer-to-peer (P2P) or business-to-peer (B2P) transactions". The for-profit enterprises are those actors who are profit-seekers who buy, sell, lend, rent or trade with the use of digital platforms as means to collaborate with other actors. The social enterprise or referred to as cooperatives are mainly "motivated by social or ecological reasons" and seek to empower actors as means of genuine sharing. Digital platforms are technology firms that facilitate the relationship between transacting parties and make profits by charging commissions. The local communities are the players at the local level with varied structures and sharing models where most activities are non-monetized and often carried out to further develop the community. The non-profit enterprises have a purpose of "advancing a mission or purpose" for a greater cause and this is their primary motivation which is genuine sharing of resources. In addition, the public sector or the government can participate in the sharing economy by "using public infrastructures to support or forge partnerships with other actors and to promote innovative forms of sharing".


Commercial dimension

Lizzie Richardson noted that sharing economy "constitutes an apparent paradox, framed as both part of the
capitalist Capitalism is an economic system An economic system, or economic order, is a system A system is a group of Interaction, interacting or interrelated elements that act according to a set of rules to form a unified whole. A system, ...

capitalist
economy and as an alternative". A distinction can be made between free sharing, such as genuine sharing, and for-profit sharing, often associated with companies such as
Uber Uber Technologies, Inc., commonly known as Uber, is an American mobility as a service Mobility-as-a-Service (MaaS) is a type of service that through a joint digital channel enables users to plan, book, and pay for multiple types of mobility ...

Uber
,
Airbnb Airbnb, Inc. (pronounced and stylized as airbnb) operates an online marketplaceAn online marketplace (or online e-commerce marketplace) is a type of e-commerce website where product or service information is provided by multiple third par ...

Airbnb
, and Taskrabbit. Commercial co-options of the 'sharing economy' encompass a wide range of structures including mostly for-profit, and, to a lesser extent, co-operative structures. The sharing economy provides expanded access to products, services and talent beyond one-to-one or singular ownership, which is sometimes referred to as " disownership". Individuals actively participate as users, providers, lenders or borrowers in varied and evolving
peer-to-peer Peer-to-peer (P2P) computing or networking is a distributed application Distributed computing is a field of computer science that studies distributed systems. A ''distributed system'' is a system whose components are located on different co ...

peer-to-peer
exchange schemes. The usage of the term sharing by for-profit companies has been described as "abuse" and "misuse" of the term, or more precisely, its
commodification Within a capitalist Capitalism is an economic system An economic system, or economic order, is a system of Production (economics), production, allocation of resources, resource allocation and Distribution (economics), distribution of go ...
. In commercial applications, the sharing economy can be considered a
marketing strategy Marketing strategy is a process that can allow an organization to concentrate its limited resources on the greatest opportunities to increase sales and achieve a sustainable competitive advantage In business, a competitive advantage is the attrib ...
more than an actual 'sharing economy' ethos; for example, the company
Airbnb Airbnb, Inc. (pronounced and stylized as airbnb) operates an online marketplaceAn online marketplace (or online e-commerce marketplace) is a type of e-commerce website where product or service information is provided by multiple third par ...

Airbnb
has sometimes been described as a platform for individuals to 'share' extra space in their homes, but in reality the space is rented, not shared. Airbnb listings additionally are often owned by
property management Property management is the operation, control, maintenance, and oversight of real estate Real estate is property consisting of land and the buildings on it, along with its natural resources such as crops, minerals or water; immovable propert ...
corporations. This has led to a number of legal challenges, with some jurisdiction ruling, for example, that
ride sharing Carpooling (also car-sharing, ride-sharing and lift-sharing) is the sharing of Automobile, car journeys so that more than one person travels in a car, and prevents the need for others to have to drive to a location themselves. By having more p ...
through for-profit services like Uber de facto makes the drivers indistinguishable from regular employees of ride sharing companies. The
escrow An escrow is a contractual arrangement in which a third party (the stakeholder or escrow agent) receives and disburses money or property Property is a system of rights that gives people legal control of valuable things, and also refers to the ...

escrow
-like model practiced by several of the largest sharing economy platforms, which facilitate and handle contracting and payments on behalf of their subscribers, further underlines an emphasis on access and transaction rather than on sharing. Sharing of resources has been known in
business-to-business Business-to-business (B2B or, in some countries, BtoB) is a situation where one business makes a commercial transaction with another. This typically occurs when: * A business is sourcing materials for their production process for output (e.g., ...
(B2B) like heavy machinery in
agriculture Agriculture is the science, art and practice of cultivating plants and livestock. Agriculture was the key development in the rise of sedentary Image:Family watching television 1958.jpg, Exercise trends, Increases in sedentary behaviors su ...

agriculture
and
forestry Forestry is the science and craft of creating, managing, planting, using, conserving and repairing forest A forest is an area of land dominated by tree In botany, a tree is a perennial plant with an elongated Plant stem, ste ...
as well as in business-to-consumer (B2C) like
self-service laundry A self-service laundry, coin laundry, laundromat or coin wash is a facility where clothes are washed and dried without much personalized professional help. Laundromats are known in the United Kingdom as launderettes or laundrettes, and in the ...
. But three major drivers enable
consumer-to-consumerConsumer to consumer (C2C) markets provide an innovative way to allow customers to interact with each other. Traditional markets require business to customer relationships, in which a customer goes to the business in order to purchase a product or s ...
(C2C) sharing of resources for a broad variety of new goods and services as well as new industries. First, customer behavior for many goods and services changes from ownership to sharing. Second, online social networks and electronic markets more easily link consumers. And third, mobile devices and electronic services make the use of shared goods and services more convenient.


Importance of trust

In many cases, the sharing economy relies on the will of the users to share, but in order to make an exchange, users have to overcome
stranger danger"Stranger danger" is the idea or warning that all strangers can potentially be dangerous. It is an example of a moral panic A moral panic is a feeling of fear spread among many people that some evil threatens the well-being of society. It is "the ...
. Access economy organizations say they are committed to building and validating trusted relationships between members of their community, including producers, suppliers, customers or participants. Beyond trusting others, the users of a sharing economy platform also have to trust the platform itself as well as the product at hand.


Size and growth


United States

According to a report by the
United States Department of Commerce The United States Department of Commerce is an executive department The United States federal executive departments are the principal units of the Federal government of the United States, executive branch of the federal government of the U ...
in June 2016, quantitative research on the size and growth of the sharing economy remains sparse. Growth estimates can be challenging to evaluate due to different and sometimes unspecified definitions about what sort of activity counts as sharing economy transactions. The report noted a 2014 study by
PricewaterhouseCoopers PricewaterhouseCoopers is a multinational Multinational may refer to: * Multinational corporation, a corporate organization operating in multiple countries * Multinational force, a military body from multiple countries * Multinational state, a ...

PricewaterhouseCoopers
, which looked at five components of the sharing economy: travel, car sharing, finance, staffing and streaming. It found that global spending in these sectors totaled about $15 billion in 2014, which was only about 5% of the total spending in those areas. The report also forecasted a possible increase of "sharing economy" spending in these areas to $335 billion by 2025, which would be about 50% of the total spending in these five areas. A 2015
PricewaterhouseCoopers PricewaterhouseCoopers is a multinational Multinational may refer to: * Multinational corporation, a corporate organization operating in multiple countries * Multinational force, a military body from multiple countries * Multinational state, a ...

PricewaterhouseCoopers
study found that nearly one-fifth of American consumers partake in some type of sharing economy activity. A 2017 report by Diana Farrell and Fiona Greig suggested that at least in the US, sharing economy growth may have peaked.


Europe

A February 2018 study ordered by the
European Commission The European Commission (EC) is the executive branch The executive is the branch of government exercising authority in and holding Moral responsibility, responsibility for the governance of a State (polity), state. The executive executes a ...

European Commission
and the
Directorate-General for Internal Market, Industry, Entrepreneurship and SMEs The Directorate-General for Internal Market, Industry, Entrepreneurship and SMEs (DG GROW) is a Directorate-General of the European Commission. The Enterprise Directorate-General works on creating an environment in which European firms can thrive ...
indicated the level of collaborative economy development between the EU-28 countries across the transport, accommodation, finance and online skills sectors. The size of the collaborative economy relative to the total EU economy was estimated to be €26.5 billion in 2016. Some experts predict that shared economy could add between €160 to €572 billion to the EU economy in the upcoming years.


China

In China, the sharing economy doubled in 2016, reaching 3.45 trillion yuan ($500 billion) in transaction volume, and was expected to grow by 40% per year on average over the next few years, according to the country's State Information Center. In 2017, an estimated 700 million people used sharing economy platforms.


Russia

According to TIARCENTER and the Russian Association of Electronic Communications, eight key verticals of Russia's sharing economy (C2C sales, odd jobs, car sharing, carpooling, accommodation rentals, shared offices, crowdfunding, and goods sharing) grew 30% to 511 billion rubles ($7.8 billion) in 2018.


Economic effects

The impacts of the access economy in terms of costs, wages and employment are not easily measured and appear to be growing. Various estimates indicate that 30-40% of the U.S. workforce is self-employed, part-time, temporary or freelancers. However, the exact percentage of those performing short-term tasks or projects found via technology platforms was not effectively measured as of 2015 by government sources. In the U.S., one private industry survey placed the number of "full-time independent workers" at 17.8 million in 2015, roughly the same as 2014. Another survey estimated the number of workers who do at least some freelance work at 53.7 million in 2015, roughly 34% of the workforce and up slightly from 2014. Economists Lawrence F. Katz and Alan B. Krueger wrote in March 2016 that there is a trend towards more workers in alternative (part-time or contract) work arrangements rather than full-time; the percentage of workers in such arrangements rose from 10.1% in 2005 to 15.8% in late 2015. Katz and Krueger defined alternative work arrangements as "temporary help agency workers, on-call workers, contract company workers, and independent contractors or free-lancers". They also estimated that approximately 0.5% of all workers identify customers through an online intermediary; this was consistent with two others studies that estimated the amount at 0.4% and 0.6%. At the individual transaction level, the removal of a higher overhead business intermediary (say a taxi company) with a lower cost technology platform helps reduce the cost of the transaction for the customer while also providing an opportunity for additional suppliers to compete for the business, further reducing costs. Consumers can then spend more on other goods and services, stimulating demand and production in other parts of the economy. Classical economics argues that innovation that lowers the cost of goods and services represents a net economic benefit overall. However, like many new technologies and business innovations, this trend is disruptive to existing business models and presents challenges for governments and regulators. For example, should the companies providing the technology platform be liable for the actions of the suppliers in their network? Should persons in their network be treated as employees, receiving benefits such as healthcare and retirement plans? If consumers tend to be higher income persons while the suppliers are lower-income persons, will the lower cost of the services (and therefore lower compensation of the suppliers) worsen income inequality? These are among the many questions the on-demand economy presents.


Cost management and budgeting by providers

Using a personal car to transport passengers or deliveries requires payment, or sufferance, of
cost In production Production may be: Economics and business * Production (economics) * Production, the act of manufacturing goods * Production, in the outline of industrial organization, the act of making products (goods and services) * Production ...

cost
s for fees deducted by the dispatching company, fuel, wear and tear, depreciation, interest, taxes, as well as adequate insurance. The driver is typically not paid for driving to an area where fares might be found in the volume necessary for high earnings, or driving to the location of a pickup or returning from a drop-off point.
Mobile app A mobile application, also referred to as a mobile app or simply an app, is a computer program In imperative programming In computer science, imperative programming is a programming paradigm that uses Statement (computer science), statements t ...
s have been written that help a driver be aware of and manage such costs has been introduced.


Effects on infrastructure

Uber, Airbnb, and other companies have had drastic effects on infrastructures such as road congestion and housing. Major cities such as San Francisco and New York City have arguably become more congested due to their use. According to transportation analyst Charles Komanoff, "Uber-caused congestion has reduced traffic speeds in downtown Manhattan by around 8 percent".


Effect on the elderly

The percentage of seniors in the work force has increased from 20.7% in 2009 to 23.1% in 2015, an increase in part attributed to the rise of the access economy.


Benefits

Suggested benefits of the sharing economy include:


Local delivery

An example of grocery delivery in sharing economy is Instakart. It has the same business model as that of sharing economy based companies like Uber, Airbnb, or CanYa.
Instacart Instacart is an American company that operates a grocery delivery and pick-up service in the United States The United States of America (USA), commonly known as the United States (U.S. or US), or America, is a country Contiguous United Sta ...
uses resources that are readily available, and the shoppers shop at existing grocery shops. The contract workers use their personal vehicles to deliver groceries to customers. Instacart manages to keep its cost low as it does not require any infrastructure to store goods. In addition to having contract workers, Instacart allows signing up to be a "personal shopper" for Instacart through its official web page.


Transparent and open data increases innovation

A common premise is that when information about goods is shared (typically via an
online marketplace An online marketplace (or online e-commerce marketplace) is a type of e-commerce E-commerce (electronic commerce) is the activity of electronically The field of electronics is a branch of physics and electrical engineering that deals with the ...
), the value of those goods may increase for the business, for individuals, for the community and for society in general. Many state, local and federal governments are engaged in
open data Open Data is the idea that some data should be freely available to everyone to use and republish as they wish, without restrictions from copyright, patents or other mechanisms of control. The goals of the open-source data movement are similar ...

open data
initiatives and projects such as data.gov. The theory of open or "transparent" access to information enables greater innovation, and makes for more efficient use of products and services, and thus supporting resilient communities.


Unused value is wasted value

Unused value refers to the time over which products, services, and talents lay idle. This idle time is wasted value that s and organizations that are based on sharing can potentially utilize. The classic example is that the average car is unused 95% of the time. This wasted value can be a significant resource, and hence an opportunity, for sharing economy car solutions. There is also significant unused value in "wasted time", as articulated by
Clay Shirky Clay Shirky (born 1964) is an American writer, consultant and teacher on the social and economic effects of Internet The Internet (Capitalization of Internet, or internet) is the global system of interconnected computer networks that u ...

Clay Shirky
in his analysis of the power of crowds connected by information technology. Many people have unused capacity in the course of their day. With social media and information technology, such people can donate small slivers of time to take care of simple tasks that others need doing. Examples of these
crowdsourcing Crowdsourcing is a procurement, sourcing model in which individuals or organizations obtain goods and services, goods or services—including ideas, voting, micro-tasks, and finances—from a large, relatively open, and often rapidly evolving ...

crowdsourcing
solutions include the for-profit
Amazon Mechanical Turk Amazon Mechanical Turk (MTurk) is a crowdsourcing website for businesses (known as Requesters) to hire remotely located "crowdworkers" to perform discrete on-demand tasks that computers are currently unable to do. It is operated under Amazon Web ...
and the non-profit
Ushahidi Ushahidi is an Open-source software, open source software application, and a non-profit technology company with staff in nine countries whose mission is to help marginalized people raise their voice and those who serve them to listen and respond ...

Ushahidi
.


Other benefits

Encompassing many of the listed benefits of the sharing economy is the idea of the freelance worker. Through monetizing unused assets, such as renting out a spare guest room on Airbnb, or providing personal services to others, such as becoming a driver with Uber, people are in effect becoming freelance workers. Freelance work entails better opportunities for employment, as well as more flexibility for workers, as people have the ability to pick and choose the time and place of their work. As freelance workers, people can plan around their existing schedules and maintain multiple jobs if needed. Evidence of the appeal to this type of work can be seen from a survey conducted by the
Freelancers Union Freelancers Union is a nonprofit organization based in New York City that provides advocacy, programming and curated insurance benefits for freelancers through partnerships. The organization dessiminates information through monthly meetings. Rafa ...
, which shows that around 34% of the U.S. population is involved in freelance work. According to an article by Margarita Hakobyan, freelance work can also be beneficial for small businesses. During their early developmental stages, many small companies can't afford or aren't in need of full-time departments, but rather require specialized work for a certain project or for a short period of time. With freelance workers offering their services in the sharing economy, firms are able to save money on long-term labor costs and increase marginal revenue from their operations. Christopher Koopman, an author of a study by
George Mason University George Mason University (Mason, GMU, George Mason) is a Public university, public research university flagshiped in Fairfax County, Virginia with four campuses throughout Northern Virginia and one campus in South Korea. Established in 1957 as th ...

George Mason University
economists, said the sharing economy "allows people to take idle capital and turn them into revenue sources". He has stated, "People are taking spare bedroom cars, tools they are not using and becoming their own entrepreneurs." Arun Sundararajan, a New York University economist who studies the sharing economy, told a congressional hearing that "this transition will have a positive impact on economic growth and welfare, by stimulating new consumption, by raising productivity, and by catalyzing individual innovation and entrepreneurship". A study in '' Intereconomics / The Review of European Economic Policy'' noted that the sharing economy has the potential to bring many benefits for the economy, while noting that this presupposes that the success of sharing economy services reflects their business models rather than 'regulatory arbitrage' from avoiding the regulation that affects traditional businesses. An independent data study conducted by
Busbud Busbud is a travel website specializing in intercity bus tickets. Busbud covers buses in North America, South America, Europe, Africa, and Southeast Asia. Busbud is the bus travel booking website with the largest coverage, partnering with over ...

Busbud
in 2016 compared the average price of hotel rooms with the average price of
Airbnb Airbnb, Inc. (pronounced and stylized as airbnb) operates an online marketplaceAn online marketplace (or online e-commerce marketplace) is a type of e-commerce website where product or service information is provided by multiple third par ...

Airbnb
listings in thirteen major cities in the United States. The research concluded that in nine of the thirteen cities, Airbnb rates were lower than hotel rates by an average price of $34.56. A further study conducted by Busbud compared the average hotel rate with the average Airbnb rate in eight major European cities. The research concluded that the Airbnb rates were lower than the hotel rates in six of the eight cities by a factor of $72. Data from a separate study shows that with Airbnb's entry into the market in Austin, Texas hotels were required to lower prices by 6 percent to keep up with Airbnb's lower prices. Additional benefits include: * Reducing negative environmental impacts through decreasing the amount of goods needed to be produced, cutting down on industry pollution (such as reducing the
carbon footprint A carbon footprint is the total greenhouse gas (GHG) emissions caused by an individual, event, organization, service, place or product, expressed as carbon dioxide equivalent Global warming potential (GWP) is the heat absorbed by any greenhou ...

carbon footprint
and overall consumption of resources) * Strengthening communities * Lowering consumer costs by borrowing and recycling items * Providing people with access to goods who can't afford buying them or have no interest in long-term usage * Increased independence, flexibility and
self-reliance "Self-Reliance" is an 1841 essay written by American transcendentalist philosopher and essayist Ralph Waldo Emerson Ralph Waldo Emerson (May 25, 1803April 27, 1882), who went by his middle name Waldo, was an American essayist, lecturer, philo ...
by
decentralization Decentralization or decentralisation is the process by which the activities of an organization, particularly those regarding planning and decision making, are distributed or delegated away from a central, authoritative location or group. Conce ...

decentralization
, the abolition of monetary entry-barriers, and
self-organization Self-organization, also called (in the social sciences) spontaneous order, is a process where some form of overall order arises from local interactions between parts of an initially disordered system A system is a group of Interaction, inte ...

self-organization
* Increased
participatory democracy Participatory democracy or participative democracy is a model of democracy in which citizens are provided power to make political decisions. Etymological roots of ''democracy Democracy ( gr, δημοκρατία, ''dēmokratiā'', from ''dē ...
* Accelerating
sustainable consumption Sustainable consumption (sometimes abbreviated to "SC") is the use of material products, energy and immaterial services in such a way that their use minimizes impacts on the environment, so that human needs can be met not only in the present but als ...
and production patterns
Post-print version
* Increased quality of service through rating systems provided by companies involved in the sharing economy * Increased flexibility of work hours and wages for independent contractors of the sharing economy * Increased quality of service provided by incumbent firms that work to keep up with sharing firms like Uber and Lyft * Flexible and convenient work hours: The sharing economy allows workers to set their own hours of work. An Uber driver explains, "the flexibility extends far beyond the hours you choose to work on any given week. Since you don’t have to make any sort of commitment, you can easily take time off for the big moments in your life as well, such as vacations, a wedding, the birth of a child, and more." Workers are able to accept or reject additional work based on their needs while using the commodities they already possess to make money. * Low barriers to entry: Depending on their schedules and resources, workers can provide services in more than one area with different companies. This allows workers to relocate and continue earning income. Also, by working for such companies, the transaction costs associated with occupational licenses are significantly lowered. For example, in New York City, taxi drivers must have a special driver's license and undergo training and background checks, while Uber contractors can offer "their services for little more than a background check". * Maximum benefit for sellers and buyers: Enables users to improve living standards by eliminating the emotional, physical, and social burdens of ownership. Without the need to maintain a large inventory, deadweight loss is reduced, prices are kept low, all while remaining competitive in the markets. * Environmental benefit: Access economies allow the reuse and repurpose of already existing commodities. Under this business model, private owners share the assets they already possess when not in use. * Breaking of monopolies: In
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Zimbabwe
,
Airbnb Airbnb, Inc. (pronounced and stylized as airbnb) operates an online marketplaceAn online marketplace (or online e-commerce marketplace) is a type of e-commerce website where product or service information is provided by multiple third par ...

Airbnb
, along with other businesses of this type, has led to a rise in consumer benefits stemming from good prices and quality. This model also allows for more opportunities for those that are self-employed. * Several academics demonstrated that in 2015, Uber generated $6.8 billion of consumer welfare in the United States. *New jobs are created, and products bought, as people acquire items such as cars or apartments to use in the sharing economy activities.


Criticism

Oxford Internet Institute, Economic Geographer, Graham has argued that key parts of the sharing economy impose a new balance of power onto workers. By bringing together workers in low- and high-income countries, gig economy platforms that are not geographically-confined can bring about a 'race to the bottom' for workers.


Relationship to job loss

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New York Magazine ''New York'' is an American biweekly magazine concerned with life, culture, politics, and style generally, and with a particular emphasis on New York City New York City (NYC), often simply called New York, is the List of United States ci ...
'' wrote that the sharing economy has succeeded in large part because the real economy has been struggling. Specifically, in the magazine's view, the sharing economy succeeds because of a depressed labor market, in which "lots of people are trying to fill holes in their income by monetizing their stuff and their labor in creative ways", and in many cases, people join the sharing economy because they've recently lost a full-time job, including a few cases where the pricing structure of the sharing economy may have made their old jobs less profitable (e.g. full-time taxi drivers who may have switched to
Lyft Lyft, Inc. develops, markets, and operates a mobile app, offering vehicles for hire, motorized scooters, a bicycle-sharing system, and food delivery. The company is based in San Francisco, California San Francisco (/Help:IPA/English ...

Lyft
or
Uber Uber Technologies, Inc., commonly known as Uber, is an American mobility as a service Mobility-as-a-Service (MaaS) is a type of service that through a joint digital channel enables users to plan, book, and pay for multiple types of mobility ...

Uber
). The magazine writes that "In almost every case, what compels people to open up their homes and cars to complete strangers is money, not trust.... Tools that help people trust in the kindness of strangers might be pushing hesitant sharing-economy participants over the threshold to adoption. But what's getting them to the threshold in the first place is a damaged economy and harmful public policy that has forced millions of people to look to odd jobs for sustenance." Uber's "audacious plan to replace human drivers" may increase job loss as even freelance driving will be replaced by automation. However, in a report published in January 2017,
Carl Benedikt Frey Carl Benedikt Frey is a Swedish-German economist and economic historian. He is Oxford Martin Citi Fellow at University of Oxford, Oxford University where he directs the programme on the Future of Work at the Oxford Martin School. Career After st ...
found that while the introduction of Uber had not led to jobs being lost, but had caused a reduction in the incomes of incumbent taxi drivers of almost 10%. Frey found that the "sharing economy", and Uber, in particular, has had substantial negative impacts on workers wages. Some people believe the
Great Recession The Great Recession was a period of marked general decline (recession) observed in national economies globally that occurred between 2007 and 2009. The scale and timing of the recession varied from country to country (see map). At the time, the ...
led to the expansion of the sharing economy because job losses enhanced the desire for
temporary work Temporary work or temporary employment (also called gigs) refers to an employment situation where the working arrangement is limited to a certain period of time based on the needs of the employing organization. Temporary employees are sometime ...
, which is prevalent in the sharing economy. However, there are disadvantages to the worker; when companies use contract-based employment, the "advantage for a business of using such non-regular workers is obvious: It can lower labor costs dramatically, often by 30 percent, since it is not responsible for health benefits, social security, unemployment or injured workers' compensation, paid sick or vacation leave and more. Contract workers, who are barred from forming unions and have no grievance procedure, can be dismissed without notice".


Treatment of workers as independent contractors and not employees

There is debate over the status of the workers within the sharing economy; whether they should be treated as
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employees
of the companies. This issue seems to be most relevant among sharing economy companies such as Uber. The reason this has become such a major issue is that the two types of workers are treated very differently. Contract workers are not guaranteed any benefits and pay can be below average. However, if they are employees, they are granted access to benefits and pay is generally higher. This has been described as "shifting liabilities and responsibilities" to the workers, while denying them the traditional
job security Job security is the probability that an individual will keep their job; a job with a high level of security is such that a person with the job would have a small chance of losing it. Basic economic theory holds that during periods of economic e ...
. It has been argued that this trend is de facto "obliterating the achievements of unions thus far in their struggle to secure basic mutual obligations in worker-employer relations". In ''Uberland: How the Algorithms are Rewriting the Rules of Work'', technology
ethnographer Ethnography (from Greek language, Greek ''ethnos'' "folk, people, nation" and ''grapho'' "I write") is a branch of anthropology and the systematic study of individual cultures. Ethnography explores cultural phenomena from the point of view o ...

ethnographer
Alex Rosenblat argues that Uber's reluctance to classify its drivers as "employees" strips them of their agency as the company's revenue-generating workforce, resulting in lower compensation and, in some cases, risking their safety. In particular, Rosenblat critiques Uber's ratings system, which she argues elevates passengers to the role of " middle managers" without offering drivers the chance to contest poor ratings. Rosenblat notes that poor ratings, or any other number of unspecified breaches of conduct, can result in an Uber driver's "deactivation", an outcome Rosenblat likens to being fired without notice or stated cause. Prosecutors have used Uber's opaque firing policy as evidence of illegal worker misclassification; Shannon Liss-Riordan, an attorney leading a class action lawsuit against the company, claims that "the ability to fire at will is an important factor in showing a company's workers are employees, not independent contractors." The
California Public Utilities Commission The California Public Utilities Commission (CPUC or PUC) is a regulatory agency that regulates privately owned public utilities in the state of California California is a U.S. state, state in the Western United States. With over 39.3millio ...
filed a case, later settled out of court, that "addresses the same underlying issue seen in the contract worker controversy—whether the new ways of operating in the sharing economy model should be subject to the same regulations governing traditional businesses". Like Uber, Instakart faced similar lawsuits. In 2015, a lawsuit was filed against Instakart alleging the company misclassified a person who buys and delivers groceries as an independent contractor. Instakart had to eventually make all such people as part-time employees and had to accord benefits such as health insurance to those qualifying. This led to Instakart having thousands of employees overnight from zero. A 2015 article by economists at George Mason University argued that many of the regulations circumvented by sharing economy businesses are exclusive privileges lobbied for by interest groups. Workers and entrepreneurs not connected to the interest groups engaging in this
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behavior are thus restricted from entry into the market. For example, taxi unions lobbying a city government to restrict the number of cabs allowed on the road prevents larger numbers of drivers from entering the marketplace. The same research finds that while access economy workers do lack the protections that exist in the traditional economy, many of them cannot actually find work in the traditional economy. In this sense, they are taking advantage of opportunities that the traditional regulatory framework has not been able to provide for them. As the sharing economy grows, governments at all levels are reevaluating how to adjust their regulatory schemes to accommodate these workers.


Benefits not accrued evenly

Andrew Leonard Andrew Leonard (born 1962) is an American journalist who writes feature articles for ''San Francisco (magazine), San Francisco'' and contributes to Medium (service), Medium. From 1995 to 2014 he wrote for ''Salon (website), Salon.com''. He has also ...
,
Evgeny Morozov Evgeny Morozov (Russian: Eвге́ний Моро́зов; be, Яўгені Марозаў; born in 1984) is an American writer, researcher, and intellectual from Belarus who studies political and social implications of technology. He was named ...
, criticized the for-profit sector of the sharing economy, writing that sharing economy businesses "extract" profits from their given sector by "successfully akingan end run around the existing costs of doing business" – taxes, regulations, and insurance. Similarly, In the context of online freelancing marketplaces, there have been worries that the sharing economy could result in a 'race to the bottom' in terms of wages and benefits: as millions of new workers from low-income countries come online. wrote that the benefits big sharing economy players might be making for themselves are "not exactly" trickling down, and that the sharing economy "doesn't build trust" because where it builds new connections, it often "replicates old patterns of privileged access for some, and denial for others". William Alden wrote that "The so-called sharing economy is supposed to offer a new kind of capitalism, one where regular folks, enabled by efficient online platforms, can turn their fallow assets into cash machines ... But the reality is that these markets also tend to attract a class of well-heeled professional operators, who outperform the amateurs—just like the rest of the economy". The local economic benefit of the sharing economy is offset by its current form, which is that huge tech companies reap a great deal of profit in many cases. For example, Uber, which is estimated to be worth $50B as of mid-2015, takes up to 30% commission from the gross revenue of its drivers, leaving many drivers making less than minimum wage. This is reminiscent of a peak Rentier state "which derives all or a substantial portion of its national revenues from the rent of indigenous resources to external clients".


Other issues

* Companies such as Airbnb and
Uber Uber Technologies, Inc., commonly known as Uber, is an American mobility as a service Mobility-as-a-Service (MaaS) is a type of service that through a joint digital channel enables users to plan, book, and pay for multiple types of mobility ...

Uber
do not share reputation data. Individual behavior on any one platform doesn't transfer to other platforms. This fragmentation has some negative consequences, such as the Airbnb squatters who had previously deceived Kickstarter users to the tune of $40,000. Sharing data between these platforms could have prevented the repeat incident. Business Insider's view is that since the sharing economy is in its infancy, this has been accepted. However, as the industry matures, this will need to change. * Giana Eckhardt and Fleura Bardhi say that the access economy promotes and prioritizes cheap fares and low costs rather than personal relationships, which is tied to similar issues in crowdsourcing. For example, consumers reap similar benefits from Zipcar as they would from a hotel. In this example, the primary concern is the low cost. Because of this, the "sharing economy" may not be about sharing but rather about access. Giana Eckhardt and Fleura Bardhi say the "sharing" economy has taught people to prioritize cheap and easy access over interpersonal communication, and the value of going the extra mile for those interactions has diminished. * Concentration of power can lead to unethical business practices. By using a software named ' Greyball', Uber was able to make it difficult for regulatory officials to use the application. Another schemes allegedly implemented by Uber includes using its application to show 'phantom' cars nearby to consumers on the app, implying shorter pick-up times than could actually be expected. Uber denied the allegation. * Regulations that cover traditional taxi companies but not ridesharing companies can put taxis at a competitive disadvantage. Uber has faced criticism from taxi drivers worldwide due to the increased competition. Uber has also been banned from several jurisdictions due to failure to comply with licensing laws. * An umbrella sharing service named ''Sharing E Umbrella'' was started in 11 cities across China in 2017 lost almost all of the 300,000
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umbrella
s placed out for sharing purposes during the first few weeks. * Treatment of workers/Lack of employee benefits: Since access economy companies rely on independent contractors, they are not offered the same protections as that of full-time salary employees in terms of workers comp, retirement plans, sick leave, and unemployment. This debate has caused Uber to have to remove their presence in several locations such as Alaska. Uber stirred up a large controversy in Alaska because if Uber drivers were considered registered taxi drivers, that would mean they would be entitled to receiving workers' compensation insurance. However, if they were considered independent contractors they would not receive these same benefits. Due to all of the disputes, Uber pulled services from Alaska. In addition, ride-share drivers’ status continues to be ambiguous when it comes to legal matters. On New Year's Eve in 2013, an off-duty driver for Uber killed a pedestrian while looking for a rider. Since the driver was considered a contractor, Uber would not compensate for the victim's family. The contract states that the service is a matching platform and "the company does not provide transportation services, and ... has no liability for services ... provided by third parties." * Quality discrepancies: Since access economy companies rely on independent workers, the quality of service can differ between various individual providers on the same platform. In 2015, Steven Hill from the
New America Foundation New America, formerly the New America Foundation, is a think tank in the United States. It focuses on a range of public policy issues, including national security studies, technology, asset building, health, gender, energy, education, and the eco ...
cited his experience signing up to become a host on
Airbnb Airbnb, Inc. (pronounced and stylized as airbnb) operates an online marketplaceAn online marketplace (or online e-commerce marketplace) is a type of e-commerce website where product or service information is provided by multiple third par ...

Airbnb
as simple as uploading a few photos to the website "and within 15 minutes my place was 'live' like an Airbnb rental. No background check, no verifying my ID, no confirming my personal details, no questions asked. Not even any contact with a real human from their trust and safety team. Nothing." However, due to the
reputation The reputation of a social entity (a person, a social group, an organization, or a place) is an opinion about that entity typically as a result of social evaluation on a set of criteria, such as behaviour or performance. Reputation is a ubiquitou ...

reputation
model, customers are provided with a peer-reviewed rating of the provider and are given a choice of whether to proceed with the transaction. * Inadequate liability guarantees: Though some companies offer liability guarantees such as Airbnb's "Host Guarantee" that promises to pay up to 1 million in damages, it is extremely difficult to prove fault. * Ownership and usage: The access economy blurs the difference between ownership and usage, which allows for the abuse or neglect of items absent policies. * Replacement of small local companies with large international tech companies. For example, taxi companies tend to be locally owned and operated, while Uber is California-based. Therefore, taxi company profits tend to stay local, while some portion of access economy profits flows out of the local community.


Examples

Agriculture * Garden sharing *
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* Finance *
Crowdfunding Crowdfunding is the practice of funding a project or venture by raising small amounts of money from a large number of people, in modern times typically via the Internet. Crowdfunding is a form of crowdsourcing and Alternative Finance, alternative ...

Crowdfunding
* Peer-to-peer banking *
Peer-to-peer lending Peer-to-peer lending, also abbreviated as P2P lending, is the practice of lending In finance, a loan is the lending of money by one or more individuals, organizations, or other entities to other individuals, organizations etc. The recipien ...
*
Virtual economy A virtual economy (or sometimes synthetic economy) is an emergence, emergent economics, economy existing in a virtual world, usually exchanging virtual goods in the context of an online game, particularly in massively multiplayer online games (MMO ...
Food *
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Cafeteria
*
Food bank A food bank is a non-profit, charitable organization A charitable organization or charity is an organization whose primary objectives are philanthropy Philanthropy consists of "private initiatives, for the public good, focusing on quality ...
* Social dining Travel * * Click and Boat Real estate *
Airbnb Airbnb, Inc. (pronounced and stylized as airbnb) operates an online marketplaceAn online marketplace (or online e-commerce marketplace) is a type of e-commerce website where product or service information is provided by multiple third par ...

Airbnb
* Co-housing * Coliving * Collaborative workspace * CouchSurfing * Emergencybnb * Home exchange * Renting * HomeAway * Vacasa * Swimply Labor * Expert network * Open Innovation * Open source product development * Coworking * Freelance marketplace * LETS * Time banks * Upwork Property * Bartering * Book swapping * Borrowing center * Clothes swapping * Fractional ownership * Give-away shop * Library of things * Timeshare * Toy library Transportation * Bicycle-sharing system * Carpool * Carsharing and peer-to-peer carsharing * Flight sharing *
Lyft Lyft, Inc. develops, markets, and operates a mobile app, offering vehicles for hire, motorized scooters, a bicycle-sharing system, and food delivery. The company is based in San Francisco, California San Francisco (/Help:IPA/English ...

Lyft
* Share taxi * Ridesharing company *
Uber Uber Technologies, Inc., commonly known as Uber, is an American mobility as a service Mobility-as-a-Service (MaaS) is a type of service that through a joint digital channel enables users to plan, book, and pay for multiple types of mobility ...

Uber
* Vanpool Governance * Government by algorithm Business * Product service system Technology * Cloud computing * GNU Project * Open-source software * Volunteer computing * WiFi Master Key Digital rights * Copyleft * Free art license * Open content Other * Club theory * GreenPal * Wikimedia movement *
Wikipedia Wikipedia ( or ) is a free content Free content, libre content, or free information is any kind of functional work, work of art A work of art, artwork, art piece, piece of art or art object is an artistic creati ...

Wikipedia


Principles for regulation in the sharing economy

In order to reap the real benefits of a sharing economy and somehow address some issues that revolve around it, there is a great need for the government and policy-makers to create the “right enabling framework based on a set of guiding principles” proposed by the World Economic Forum. These principles are derived from the analysis of global policymaking and consultation with experts. The following are the seven principles for regulation in the sharing economy. # The first principle is creating space for innovation. This entails that “governments need to provide an initially encouraging environment while also building necessary infrastructure to allow for the development of innovation hubs.” # The second principle is that sharing economy should be people centered. This means that policies should be focused on “increasing the overall welfare of the population” as well as “improving the quality of life.” # The third principle is taking a proactive approach. This means that “new business models need to be brought into the mainstream and governments need to make clear frameworks that minimize uncertainty.” # The fourth principle is the assessment of the whole regulatory system which means administrative burdens on exiting systems should be lifted in order to give equal level of access to all actors in the network. # The fifth principle is the data-driven government. Since most sharing economy relies on the use of digital platforms, data can be easily collected, analyzed, and shared which can boost the urban environment through public-private partnerships. # The sixth principle talks about the flexible governance where actors should consider the nature of technology which is fast evolving. This calls for a sustained dialogue with key stakeholders, so all interests and rights are further protected and safeguarded. # The last principle is a shared regulation where all the players should be involved in regulatory discussions as well as in the enforcement of policy.


See also

* Platform economy * Gig worker * Post-capitalism * List of gig economy companies


References

{{Authority control Sharing economy, Social networks Peer-to-peer Business models Information Age