Sharing economy

The capitalist sharing economy is a way of purchasing goods and services that differs from the traditional
business model of corporations hiring employees to produce products to sell to consumers. In the sharing
economy, individuals are said to hire out things like their cars, homes and personal time to other individuals in
a peer-to-peer fashion.[1][2][3][4][5]

There are two main types of capitalist sharing economy enterprises:

Initiatives, usually based on the concept of book-lending libraries, in which goods and services
are provided for free (or sometimes for a modest subscription). This type of 'share' economy is
in the true ethos of a share economy, which is not intended for any one person to make an
income, or a profit.
Commercial business models in which a company provides (for a fee) a mobile app that
suppliers and customers use to buy and sell goods or services.

In commercial applications, the sharing economy can be considered a marketing strategy more than an actual
'sharing economy' ethos; for example, the company 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 corporations.[6][7]

Contents
Conceptual characteristics and related concepts
Misnomer as sharing economy
Arguments for a sharing economy
Access is preferable to ownership
Transparent and open data increases innovation
Stranger danger can be overcome
Unused value is wasted value
There are sometimes uses for "waste"
Driving forces
Employment models of the sharing economy
History
Failure of startups based on traditional sharing
Collaborative consumption
Size and growth
United States
Europe
China
Russia
Sharing economy policy initiatives
Europe
Types of collaborative consumption
 Product-service systems
Redistribution markets
Collaborative lifestyles
Benefits
Local delivery
Criticism
Relationship to job loss
Treatment of workers as independent contractors and not employees
Benefits not accrued evenly
Other issues
Economic effects
Cost management and budgeting by providers
Effects on infrastructure
Effect on the elderly
The Taylor Review
Examples
See also
References

Conceptual characteristics and related concepts

There is a conceptual and semantic confusion caused by the many facets of internet-based sharing leading to
discussions regarding the boundaries and the scope of the Sharing Economy[2][8] and regarding the definition
of the sharing economy.[9]

The term "sharing economy" is often used in an ambiguous way and can imply different characteristics.[10]
For example, The sharing economy is sometimes understood exclusively as a peer-to-peer phenomenon[11]
while at times, it has been framed as a business-to-customer phenomenon.[12] Additionally, the sharing
economy is often understood to encompass transactions with a permanent transfer of ownership of a resource,
such as a sale,[13] while other times, transactions with a transfer of ownership are considered beyond the
boundaries of the sharing economy.[14] 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”[10]

While the term sharing economy is the term most often used,[15] the sharing economy is also referred to as the
access economy, peer-to-peer (P2P) economy, gig economy, collaborative consumption or collaborative
economy.

The sharing economy is sometimes related to the circular economy, which aims to minimize waste and which
includes co-operatives, co-creation, recycling, upcycling, re-distribution, and trading used goods. It is also
closely related to collaborative consumption in which an item is consumed by multiple people.
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. [16] 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".[17] Individuals actively participate as users, providers, lenders or borrowers in varied and
evolving peer-to-peer exchange schemes.[18]

Business activities such as renting, leasing, pooling, and sharing, have been identified as contributing to
product lifetime and especially product lifetime extension through these practices of mutualisation and
sometimes, redistribution (through donating, swapping, secondhand marketplaces).[19][20]

Misnomer as sharing economy

In an article in Harvard Business Review, 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."[21] The article states that companies (such as Uber) that understand this, and whose marketing
highlights the financial benefits to participants, are successful, while companies (such as Lyft) whose
marketing highlights the social benefits of the service are less successful.

This insight − that it is an access economy rather than a sharing economy – has important
implications for how companies in this space compete. It implies that consumers are more
interested in lower costs and convenience than they are in fostering social relationships with the
company or other consumers.....The access economy is changing the structure of a variety of
industries, and a new understanding of the consumer is needed to drive successful business
models. A successful business model in the access economy will not be based on community,
however, as a sharing orientation does not accurately depict the benefits consumers hope to
receive. It is important to highlight the benefits that access provides in contrast to the
disadvantages of ownership and sharing.[21]

The notion of "sharing economy" has often been considered an oxymoron, and a misnomer for actual
commercial exchanges.[22] Arnould and Rose[23] proposed to replace the misleading term "sharing" with
mutualism or mutualization. A distinction can be made between free mutualization, such as genuine sharing,
and for-profit mutualization, such as Uber, Airbnb, and Taskrabbit.[24][2][25][7]

According to George Ritzer,[26] this trend towards increased consumer input in commercial exchanges refers
to the notion of prosumption, which, as such, is not new. The mutualization of resources is for example well
known in business-to-business (B2B) like heavy machinery in agriculture and forestry as well as in business-
to-consumer (B2C) like self-service laundry. But three major drivers enable consumer-to-consumer (C2C)
mutualization 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. For example, smartphone key entry technology
makes sharing an apartment easier compared to using physical keys.[27]

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.[28]

Michael Bauwens notes that companies such as Uber aren't operated by a peer-to-peer structure, saying:[29]
 A "sharing economy," by definition, is lateral in structure. It is a peer-to-peer economy. But Uber,
as its name suggests, is hierarchical in structure. It monitors and controls its drivers, demanding
that they purchase services from it while guiding their movements and determining their level of
earnings. And its pricing mechanisms impose unpredictable costs on its customers, extracting
greater amounts whenever the data suggests customers can be compelled to pay them. This is a
top-down economy, not a "shared" one.

While some successful platforms such as Airbnb or CanYa involve the sharing of a resource, the term sharing
economy has been widely criticised as being misleading.[30][31]

Arguments for a sharing economy

Access is preferable to ownership

As an economic model, the access economy suggests that "access" to goods and services may become more
desirable than "ownership" of goods.[32] Steve Denning notes:[33]

The third thing that the Internet did was social. It created a generation of people who began doing
something that cut to the heart of the way society has been organized for several hundred years.
These people—mainly young—began preferring access to ownership. Instead of planning their
lives on the premise of acquiring and owning more private property, this new generation began
finding meaning and satisfaction in having access to things and interacting with other people in
the process.

Transparent and open data increases innovation

A common premise is that when information about goods is shared (typically via an online marketplace), the
value of those goods may increase for the business, for individuals, for the community and for society in
general.[34]

Many state, local and federal governments[35] are engaged in open data initiatives and projects such as
data.gov[36] and the London Data Store.[37] 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.[38]

Stranger danger can be overcome

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. Access economy organizations say they are committed to building
and validating trusted relationships between members of their community, including producers, suppliers,
customers or participants.[39] Beyond trusting others (i.e., the peers), the users of a sharing economy platform
also have to trust the platform itself as well as the product at hand.[40]

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 business models and organizations that are based on sharing can potentially utilize. The classic
example is that the average car is unused 95% of the time.[41] 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 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 solutions[42] include the for-profit Amazon Mechanical Turk and the non-
profit Ushahidi.

There are sometimes uses for "waste"

Waste is commonly considered as something that is no longer wanted and needs to be discarded. The
challenge with this point of view is that much of what we define as waste still has value that, with proper
design and distribution, can safely serve as "nutrients" for follow-on processes, unlocking new levels of value
in increasingly scarce and expensive resources. One example is "heirloom design"[43] as articulated by
physicist and inventor Saul Griffith.[44]

Driving forces

Several key macro developments led to the growth in the sharing. The "sharing economy" results from several
deep-seated technological, economic, political, and societal changes:[45]

Technological: The growth of e-commerce transformed consumers' relationship with the

procurement of goods and services. Enabling technologies have made it easy for large
networks of people and organizations to transact directly.[46] These include; open data,[47] the
ubiquity and low cost of mobile phones, and social media.[48]
Social commerce is the notion that commerce is facilitated by social networking. People are
more likely to buy products because of the "social influence exerted by peers on purchasing
decisions".[49] The involvement of social media encourages and promotes the sharing
economy and social commerce because it not only encourages people buy similar products
and try similar things, but it also encourages people to look for group deals such as those
proliferated by companies like Groupon.[50][49]
Economic: The Great Recession saw a decline of stable personal income as well reduction of
"surplus" Disposable and discretionary income and purchasing power. Rising prosperity
across the developing world coupled with population growth is putting greater strain on natural
resources and has caused a spike in costs and market volatility. This has been increasing
pressure on traditional manufacturers to seek design, production and distribution alternatives
that will stabilize costs and smooth projected expenditures. In this context, the circular economy
approach has been gaining interest among many global corporate actors. While a handful of
pioneering companies are leading the way, wider adoption will rely on mesh economy skills
such as the collection and sharing of data, the spread of best practices, and increased
collaboration.[51] An example of this could be taken from an interview by Arun Sundararajan
with Ola CEO Bhavish Aggarwal suggesting that India's rising middle class might ‘leap-frog’
car ownership altogether and shift to ride-sharing given car ownerships large inefficiencies in
the United States.[15] Consumers look for cost-reduction solutions within the sharing economy.
Communities and companies can reduce the costs of acquiring resources through sharing
those resources with others whilst they are in use. In Tomorrow 3.0, author Michael Munger
discussed reducing transaction costs by splitting costs.[52] Certain companies allow people to
use the same resources but split the fixed costs of doing so by sharing them. Unlike Uber or
 Airbnb, this type of collaborative consumption reduces the amount of excess capacity in the
economy without commoditizing the assets that it relies on.
Political: macroeconomic austerity and an increased viability of complementary currency
mechanisms.
Social: personal Economic materialism as a central pillar of optimal lifestyle choices began to
be questioned in favor of Postmaterialism.
The trend towards urban lifestyles: The congested urban setting creates a new series of
problems that can be addressed by the sharing economy. "Unlike earlier generations of
information or technology-based enterprises, sharing enterprises rely on a critical mass of
providers and consumers who are sufficiently close to each other or to other amenities to make
their platforms work, often finding value in the very fact of the beneficial spillovers from
proximity."[53] Like taxi services, a transportation network company (TNC) takes people who
live in one common area and transports them to another area. However, to make the initial pick
up the driver must be relatively close to the passenger. Urban settings inherently force people
to live and work in close proximity. This means that the number of people going to and from
similar destinations is going to increase. TNCs realized this and created a business format to
take advantage of this new urban setting. In urban settings where there is limited space for
housing, people are always hard-pressed to find cheaper housing and rental options when
moving from city to city. Airbnb realized this and was able to take advantage of people who had
space they aren't using and rent it out at cheaper costs to the people who need a place to stay
for shorter amounts of time.
Crises: Because this model of sharing or gig economy is somewhat protected in times of crisis,
it is unlikely that the pandemic will usher in the downfall of the sharing economy, as some have
feared. In addition, like their traditional counterparts, sharing economy companies will try to
weather the pandemic by diversifying and consolidating. Those feeling the stresses of the
coronavirus are likely to branch out from their core businesses, seeking untapped markets and
customers or new idle goods. In some cases, the pandemic may have created new market
opportunities.[54]

Employment models of the sharing economy

The business model of companies situated in the gig economy has been criticised for using technology to
evade worker protections such as rights to minimum wages and paid leave and disguising employment
relationships as independent contracting/self employment in order to shift costs onto workers. For example, a
study by the Centre for Future Work at the Australia Institute accused Uber of "creatively leveraging the
advantages of its dispatch system in order to evade traditional labour regulations (and other inconvenient taxes
and regulations)."[55] While in traditional industries, workers may enjoy the benefits of trade unions,
healthcare provision, minimum wage, contract termination and working hours rights, employees within the
sharing economy are often paid as freelancers. Freelancers do not receive pension benefits or other employee
rights and benefits and are often not paid on an hourly basis.

A 2016 study by the McKinsey Global Institute concluded that, across America and England, there were a
total of 162 million people that were involved in some type of independent work.[56] Moreover, their payment
is linked to the gigs they perform, which could be deliveries, rentals or other services.[57]

In some jurisdictions, legal rulings have classified full-time freelancers working for a single main employer of
the gig economy as workers and awarded them regular worker rights and protection. An example is the
October 2016 ruling against Uber in the case of Uber BV v Aslam, which supported the claim of two Uber
drivers to be classified as workers and to receive the related worker rights and benefits.[58]
Nevertheless, as the speed of the Fourth Industrial Revolution rapidly eclipses that of the previous three,
companies will seek to seamlessly optimize speed to capability, cost and risk, shifting work between these
various sources while eschewing longer-term contracts and liabilities in favor of more variable costs that are
aligned to when work is delivered. The shift in work from a singularity of focus on employment to this new
plurality of means, as described by futurist Ravin Jesuthasan [59], will see organizations continue their
inexorable shift away from the implied promise of long-term employment in favor of work relationships that
are shorter in duration.

It is important to distinguish employment in the sharing economy from employment through zero-hour
contracts, a term primarily used in the United Kingdom. Employment in the gig economy entails receiving
compensation for one key performance indicator, which, for example, is defined as parcels delivered or taxi
lifts conducted. Another feature is that employees can opt to refuse taking an order. Although employers do
not have to guarantee employment or employees can also refuse to take an order under a zero-hour contract,
workers under such a contract are paid by the hour and not directly through business-related indicators as in
the case of the gig economy.[60]

History
One inspiration for the sharing economy was the tragedy of the commons, 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. The
Harvard law professor Yochai Benkler, one of the earliest proponents of open source software, posited that
network technology could mitigate this issue through what he called 'commons-based peer production', a
concept first articulated in 2002.[61] 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.[62]

The term "sharing economy" began to appear around the time of the Great Recession, enabling social
technologies, and an increasing sense of urgency around global population growth and resource depletion.
Professor Lawrence Lessig was possibly first to use the term in 2008, though others claim the origin of the
term is unknown.[63][64] As of 2015, according to a Pew Research Center survey, only 27% of Americans had
heard of the term "sharing economy".[65] 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.[65]

Failure of startups based on traditional sharing

Many people thought it made sense for regular consumers not to buy their own power drill-—a tool that many
consumers might use for only a few minutes in their lifetime-but to borrow from others instead, and that this
borrowing could be facilitated by online platforms. Several startups were launched to help people share drills
and similar goods along these lines. However, it was clear that consumers were not interested in such
temporary exchanges, leading to the failure of many startups which aimed to facilitate traditional
sharing.[66][67]

Collaborative consumption

The term "collaborative consumption" was coined by Marcus Felson and Joe L. Spaeth in their paper
"Community Structure and Collaborative Consumption: A routine activity approach" published in 1978 in the
American Behavioral Scientist.[68]

In 2011, collaborative consumption was named one of TIME magazine's 10 ideas that will change the
world.[69]
A June 2018 study,[70] using bibliometrics and network analysis, analyzed the evolution of scholarly research
on collaborative consumption, and identified that this expression started in 2010 with Botsman and Rogers'
(2010) book "What's mine is yours: The rise of collaborative consumption". The number of studies published
on the subject then increased in 2014. Furthermore, there are four clusters of research: 1) exploration and
conceptualization of collaborative consumption; 2) consumer behavior and marketing empiricism; 3)
mutualization and sharing systems; 4) sustainability in the collaborative economy. The analysis suggests that
this last cluster was under-researched in contrast to the three others, but has started to increase in importance
since 2017.

in its 2015 Budget, the UK Government set out objectives to improve economic growth including to make
Britain the "...best place in the world to start, invest in, and grow a business, including through a package of
measures to help unlock the potential of the sharing economy..."[71]

Also in 2015, The Business of Sharing by Alex Stephany, CEO of JustPark, was published by Palgrave
Macmillan.[72] The book features interviews with high-profile entrepreneurs such as Martin Varsavsky and
venture capitalists such as Fred Wilson.[63]

Size and growth

United States

According to a report by the United States Department of Commerce 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, 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
study found that nearly one-fifth of American consumers partake in some type of sharing economy activity.[73]
A 2017 report by Diana Farrell and Fiona Greig suggested that at least in the US, sharing economy growth
may have peaked.[74]

Europe

A December 2017 study ordered by the European Commission indicated that the volume of P2P transactions
in the EU across five sectors: sales of goods, accommodation rentals, goods sharing, odd jobs, and ridesharing,
totaled €27.9 billion in 2015.[75] Some experts predict that shared economy could add between €160 to €572
billion to the EU economy in the upcoming years.[76]

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.[77] In 2017, an estimated 700 million people used sharing economy
platforms.[78]

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.[79]

Sharing economy policy initiatives

Europe

European Commission has acknowledged the growing role of sharing/collaborative economy as a distinctive
sector of the overall economic model and thus has in the last years launched a number of initiatives to guide
and regulate the sector.

On 25 December 2013 European Economic and Social Committee launched the European Sharing Economy
Coalition initiative. The aim of the initiative was to bring together a critical mass of stakeholders that would
promote the importance of "sharing and collaboration, as the driving force behind a more prosperous,
sustainable and competitive European economy."[80] Specific objectives of the European Sharing Economy
Coalition were noted as follows:

Mainstream the Sharing Economy - done through awareness raising which would increase
visibility as well as build capacity amongst community and policy leaders.
Sustain the Sharing Economy - work towards more fair and sensible European regulatory
framework that would facilitate the concept of sharing economy becoming a political priority
within the EU.
Scale up the Sharing Economy - to achieve scalability and transferability of the sharing
economy within the EU, achieving this by encouraging exchange of ideas on better leadership
and best practices.
Finance the Sharing Economy - pooling EU funding to launch early stage shared economy
initiatives across Europe, especially focusing on urban areas.[80]

In June 2016 the European Commission released a Communication document in order to better guide the
growing sharing economy sector within EU member states. By providing non-binding guidance on legal and
policy matters to all stakeholders the document aims to help "reap [...] benefits and to address concerns over
the uncertainty about rights and obligations of those taking part in the collaborative economy".[76]

Types of collaborative consumption

Collaborative consumption as a phenomenon is a class of economic arrangements in which participants
mutualize access to products or services, in addition to finding original ways to individual ownership.[1][2] The
phenomenon stems from consumers' increasing desire to be in control of their consumption instead of "passive
'victims' of hyperconsumption".[81]

The collaborative consumption model is used in online marketplaces such as eBay as well as emerging sectors
such as social lending, peer-to-peer accommodation, peer-to-peer travel experiences,[82] peer-to-peer task
assignments or travel advising, and carsharing or commuting-bus sharing.[81]

Collaborative consumption refers to resource circulation systems which allow a consumer two-sided role, in
which consumers may act as both providers of resources or obtainers of resources.[24] The exchange may be
performed directly on a peer-to-peer basis, or indirectly through an intermediary; online or offline; for free or
for other compensation (ex. money, points, services, etc.).[2] This vision allows for a broader understanding of
the sharing economy based on the overarching criteria of consumers' changing role capacity.[24][2]
Originally, in 2010, Botsman and Rogers identified three resource
circulation systems within collaborative consumption, i.e. the sharing
economy: product service systems, redistribution markets and
collaborative lifestyles.

Product-service systems

Product-service systems refer to commercial peer-to-peer

mutualization systems (CPMS), allowing consumers to engage in
monetized exchanges through Social peer-to-peer processes for
temporary access to goods. Goods that are privately owned can be
shared or rented out via peer-to-peer marketplaces.[83] For example,
BMW's "DriveNow", established in 2011, is a car rental service that
offers an alternative to owning a car. Users can access a car when and
where they need one and pay for their usage by the minute.[84] A
variety of traditional companies start to offer sharing services.[85]
Examples of Commons-based peer
production (CBPP) communities, aka
Redistribution markets P2P communities

A system of collaborative consumption is based on used or pre-owned

goods being passed on from someone who does not want them to someone who does want them. This is
another alternative to the more common 'reduce, reuse, recycle, repair' methods of dealing with waste. In some
markets, the goods may be free, as on The Freecycle Network, Zwaggle, or Kashless.org. In others, the goods
are swapped (as on Swap.com) or sold for cash (as on eBay, craigslist, and uSell).

Collaborative lifestyles

Collaborative lifestyles refer to community-based platforms, allowing consumers to engage in monetized

exchanges through Social peer-to-peer processes for services or access to resources such as money or
skills.[86] These systems are based on people with similar needs or interests banding together to mutualize and
exchange less-tangible assets such as time, space, skills, and money. The growth of mobile technology
provides a platform to enable location-based GPS technology and to also provide real-time sharing.[87]

Benefits
Suggested benefits of the sharing economy 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 and
overall consumption of resources)[88][89][90]
Strengthening communities[89]
Lowering consumer costs by borrowing and recycling items[89]
Providing people with access to goods who can't afford buying them[91] or have no interest in
long-term usage
Increased independence, flexibility and self-reliance by decentralization, the abolition of
monetary entry-barriers, and self-organization[92]
Increased participatory democracy[90]
Accelerating sustainable consumption and production patterns[93]
 Increased quality of service through rating systems provided by companies involved in the
sharing economy[94]
Increased flexibility of work hours and wages for independent contractors of the sharing
economy[95]
Increased quality of service provided by incumbent firms that work to keep up with sharing firms
like Uber and Lyft[96]

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, which shows that around 34% of the U.S. population
is involved in freelance work.[97]

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.[98]

Researcher Christopher Koopman, an author of a study by 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[s], cars, tools they are not using and becoming their own entrepreneurs."[99]
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".[99]

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.[100]

The power bank-sharing concept works as follows: Through an app, users locate a shared-charger station,
scan a QR code, pay a deposit, and borrow a power bank. The battery packs can be returned to any charging
station. LeDian allowed customers to use the power banks free of charge for the first 24 hours after paying a
50-yuan ($7.60) deposit. After the first day, users were charged 2 yuan per day for the service. The company
failed in 2017.[101]

An independent data study conducted by Busbud in 2016 compared the average price of hotel rooms with the
average price of 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.[102] 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.[102] 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.[103]

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."[104] 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,[105] while Uber contractors can offer "their services for little more than a background
check."[106]
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.[21]
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.[107]
Breaking of monopolies: In Zimbabwe, 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.[108]

Local delivery

UberEATS allows users to order food and register to be UberEATS drivers. Similar to Uber drivers,
UberEATS drivers get paid for delivering food.[109] 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.[110] Instacart 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.[111][112]

Criticism
Oxford Internet Institute, Economic Geographer, Graham has argued that key parts of the sharing economy
impose a new balance of power onto workers.[113] 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

New York Magazine 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 or 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."[114][115][116]

Uber's "audacious plan to replace human drivers" may increase job loss as even freelance driving will be
replaced by automation.[117]

However, in a report published in January 2017, Carl Benedikt Frey 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.[118]

Some people believe the Great Recession led to the expansion of the sharing economy because job losses
enhanced the desire for temporary work, 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".[119]

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
independent contractors or 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 big 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.

In Uberland: How the Algorithms are Rewriting the Rules of Work, technology 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.[120] 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.[121] 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.[122] 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.”[123]

The California Public Utilities Commission 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".[124] Like Uber,
Instakart too had to face 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.[125] 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.[125]

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.[126] Workers and
entrepreneurs not connected to the interest groups engaging in this rent-seeking 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,[127] many of them cannot actually find work in the traditional economy.[126] 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,[128][129][130] Evgeny Morozov,[131] Bernard Marszalek,[132] Dean Baker,[133][134] and

Andrew Keen[135] criticized the for-profit sector of the sharing economy, writing that sharing economy
businesses "extract" profits from their given sector by "successfully [making] an 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
or wages and benefits: as millions of new workers from low-income countries come online.[136][137]

Susie Cagle 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".[138] 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".[139]

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,[140] takes up to 30% commission from the gross revenue of its drivers,[141] leaving many
drivers making less than minimum wage.[142] 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 do not share their reputation data with the very users to
whom it belongs. No matter how well people behave on any one platform, their reputation
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.[143] 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.[144]
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.[145]
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.[146]
 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.[147]
Regulations that cover traditional taxi companies but not transportation network companies can
put taxis at a competitive disadvantage.[148] 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.[149]
An umbrella sharing service named Sharing E Umbrella was started in 11 cities across China
in 2017 lost almost all of the 300,000 umbrellas placed out for sharing purposes during the first
few weeks.[150]
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.[151][148]
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.[149] 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."[148]
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 cited his experience signing up to become a
host on 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.".[152] However, due to the 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.[153]
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.

Economic effects
The impacts of the access economy in terms of costs, wages and employment are not easily measured and
appear to be growing.[154] 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.[155]
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.[156]

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.[157] Katz and Krueger defined
alternative work arrangements as "temporary help agency workers, on-call workers, contract company
workers, and independent contractors or free-lancers".[158] 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%.[158]

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.[155] 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.[159]

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.[155][160]

Cost management and budgeting by providers

Using a personal car to transport passengers or deliveries requires payment, or sufferance, of costs 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.[161]
Mobile apps have been written that help a driver be aware of and manage such costs has been introduced.[162]

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".[119]

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.[163]

The Taylor Review

As a response to the fast-changing nature of working practices in the modern economy, especially temporary
work, The UK Government has carried out a review and issued guidelines in an attempt to address these
issues.[164] A 7-point plan was suggested to improve working conditions and security.[165] In addition, The
Taylor Review outlines demands asking the distribution of power be distributed at a more equal level. It asks
for workers of these, gig economy businesses be labeled as "dependent contractors with extra benefits". Other
demands include, better corporate management, skill development efforts, fostering of a positive workplace,
and financial representation provided by the state.[166]

Examples
Agriculture Labor Governance

Garden sharing Expert network Government by

Heifer International Open Innovation algorithm
Seed swap Open source product development
Business
Coworking
Finance Freelance marketplace Product service system
Crowdfunding LETS
Time banks Technology
Peer-to-peer banking
Peer-to-peer lending Cloud computing
Property
Virtual economy GNU Project
Bartering Open-source software
Food Book swapping Volunteer computing
Cafeteria Borrowing center WiFi Master Key
Food bank Clothes swapping
Fractional ownership Digital rights
Social dining
Freecycling
Copyleft
Travel Give-away shop
Free art license
Library of things
ToursByLocals Open content
Timeshare
Click and Boat
Toy library Other
Real estate Transportation Club theory
Airbnb Wikimedia movement
Bicycle-sharing system
Co-housing Wikipedia
Carpool
Coliving
Carsharing and peer-to-peer
Collaborative carsharing
workspace
Flight sharing
CouchSurfing
Share taxi
Emergencybnb
Transportation network company
Home exchange Vanpool
Renting
HomeAway
Vacasa
See also
Platform economy
Gig worker
List of gig economy companies

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