REVIEW #5: The Emergence and Development of a Sharing Economy

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The sharing economy is a relatively new phenomenon. It combines various ideas and technologies in order to provide new value to market participants who were previously excluded from the market or had limited access to it. At the same time, it increases competition resulting in lower prices, increases entrepreneurship and household incomes. It also upsurges asset utilization, which may translate into environmental gains. It would seem that a sharing economy is the sum of all things good.

However, these benefits come at a price of damaging traditional businesses that make a living by renting assets. This, in turn, leads to protests, traditional job erosion, shifting the risk to workers and other externalities. Moreover, it is quite difficult to regulate and a tax sharing economy is a headache to administration. In some cases it leads to eradicating a sharing economy completely (the case of Uber in Hungary) or to some extent limiting the externalities but also its benefits (AirBnB in Berlin) .

DEFINING A SHARING ECONOMY

A sharing economy is a phenomenon not easy to define. In most cases it is assumed that to be a part of sharing economy, a platform needs to proclaim it (or be proclaimed as such by the media). This is clearly far too arbitrary to be useful for any analysis. Therefore, a more objective definition may come in handy. Of course, we shall bear in mind that it is still probably not the best definition possible but it is created for a single purpose of setting a clear framework of the presented analysis. Therefore, we shall understand a sharing economy as a market for renting physical assets or money with accompanying services over the Internet using P2P channels.

I am aware that this definition may be somewhat controversial. Many people include the entire P2P market plus companies using the B2P channel in the sharing economy: e.g. Sharing knowledge (like Coursera that offers Massive Open On-line Courses or MOOC), pure services (like Task Rabbit that finds temporary employees) and even the sale of items (like eBay). This, hoverer, spans so many diverse phenomena that it is quite challenging to analyze properly. As discussed later, many parts of the peer to peer market have nothing to do with sharing at all.

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