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Street research in The Hague en Rijswijk Engels P2

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The leading businesses that are advancing the concept of the "sharing economy" are in many respects no longer insurgents and newcomers. The size and scale of Uber, Airbnb and several other firms now rival, or even surpass, those of some of the world's largest businesses in transportation, hospitality and other sectors. As the economic power of these technology-driven firms grows, there continue to be regulatory and policy skirmishes on every possible front, across cities and towns spanning the United States, Europe and beyond.

While many municipalities and regions have accepted change as inevitable and have been eager to facilitate new efficiencies for consumers - Uber in particular has made a lot of regulatory headway since 2015 - there have been cases, such as in Austin, Tex. in May 2016, where policies have been in effect reversed to block these new forms of commerce. These fights are looking more and more like political campaigns. In any case, a 2015 report from the National League of Cities reviews regulatory policies and patterns across a variety of dimensions, from safety to innovation; a 2016 report from the European Parliament weighs the costs and benefits of non-participation in the sharing economy.

The Economics and Statistics Administration of the U.S. Commerce Department issued a report in June 2016 that attempts to define and map out the contours of this emerging business sector, labeling its participants "digital matching firms." That report defines this sector through the four following characteristics:

They use information technology (IT systems), typically available via web-based platforms, such as mobile "apps" on Internet- enabled devices, to facilitate peer-to-peer transactions.

They rely on user-based rating systems for quality control, ensuring a level of trust between consumers and service providers who have not previously met.

They offer the workers who provide services via digital matching platforms flexibility in deciding their typical working hours.

To the extent that tools and assets are necessary to provide a service, digital matching firms rely on the workers using their own.

The implications of the sharing economy - part of what has also been termed the "gig economy" - have of course been hotly debated in the news media, and the research world has been steadily weighing in with deeper analysis. One central area of argument relates to whether the sharing economy is simply bringing more wage-earning opportunities to more people, or whether its net effect is the displacement of traditionally secure jobs and the creation of a land of part-time, low-paid work. It's a debate that continues to develop and play out, forcing reporters to weigh competing claims that vary in tone from boosterism to warnings of the new economy's "dark side."

While the conclusions about the overall effects of this sector are anything but clear, even as more data pour in, it is worth digging into the available literature and knowing the centers of research debate and lines of argument.

A January 2015 paper co-authored by Princeton's Alan Krueger - the former Chairman of President Barack Obama's Council of Economic Advisers - based on Uber's internal data finds clear benefits for "driver-partners" and notes the new financial opportunities created for tens of thousands of workers. Those conclusions have been critiqued by, for example, the liberal-leaning Center for Economic and Policy Research. In any case, the Krueger paper also argues that "the availability of modern technology, like the Uber app, provides many advantages and lower prices for consumers compared with the traditional taxi cab dispatch system, and this has boosted demand for ride services, which, in turn, has increased total demand for workers with the requisite skills to work as for-hire drivers, potentially raising earnings for all workers with such skills."

There is the distinct danger, on both sides, of overstating the case and the size of effects. A 2014 paper by Annette Bernhardt of University of California, Berkeley, signals a cautionary note about any claims of radical recent change being wrought across the U.S. economy:

[We] all share a strong intuition that the nature of work has fundamentally changed, contributing to the deterioration of labor standards. Yet at least with aggregate national data, it has been hard to find evidence of a strong, unambiguous shift toward nonstandard or contingent forms of work - especially in contrast to the dramatic increase in wage inequality. This is not to say that there have been no changes in the workplace. But as this paper has emphasized, for enforcement agencies and policymakers, it may be more fruitful to focus on specific industries and regions in assessing when and where pernicious forms of nonstandard work have grown, and which groups of workers have been most impacted.

It is also true that the rise of independent workers, and associated job insecurity, long predates the recent rise of the sharing economy, although their percentage of all U.S. workers is expected to grow from about one-third currently to 40% by 2020, according to some estimates.

A 2015 report from the Center for American Progress notes the heated debate in Britain over "zero hours contracts" and charges that highly insecure and contingent employment leads to the exploitation of workers. The report - co-authored by Harvard's Lawrence Summers, a top official in both the Clinton and Obama administrations, and Ed Balls, a British Labour Party MP - notes that "technology has allowed a sharing economy to develop in the United States; many of these jobs offer flexibility to workers, many of whom are working a second job and using it to build income or are parents looking for flexible work schedules. At the same time, when these jobs are the only source of income for workers and they provide no benefits, that leaves workers or the state to pay these costs."

Meanwhile, scholars such as Juliet Schor of Boston College have been examining how workers might regain bargaining power despite an increasingly app-based, decentralized system of distributed labor. "While the for-profit companies may be 'acting badly,'" she writes in an October 2014 essay, "these new technologies of peer-to-peer economic activity are potentially powerful tools for building a social movement centered on genuine practices of sharing and cooperation in the production and consumption of goods and services. But achieving that potential will require democratizing the ownership and governance of the platforms."
Fights over rules and regulations
In October 2014 the New York State Attorney General released a report into Airbnb's operations that concluded that 72% of the site's rentals violated state zoning regulations or other laws. The company's business model is built around allowing people to rent out rooms or entire apartments on a short-term basis, and the report is the latest in a series of ongoing battles Airbnb is engaged in with regulators across the world.

Berlin has banned regular short-term rentals in the most popular parts of the city without prior permission from the authorities. Paris passed a law in February 2014 to allow city inspectors to check rental homes whose owners are suspected of renting them out to visitors illegally. Airbnb has countered with its own reports on the benefits of short-term stays on local housing markets, arguing that the company's service benefits local economies.

Also known as collaborative consumption or peer-to-peer (P2P), the sharing economy challenges traditional notions of private ownership and is instead based on the shared production or consumption of goods and services. Its origins were in not-for-profit initiatives such as Wikipedia (2001) and Couchsurfing and Freecycle (both 2003). Advances in information technology enabled the creation of large-scale bike-share systems (the first was in Lyon, France, in 2005), and these have subsequently expanded to the United States and around the world.

Social media and mobile technology have enabled the latest expansion of the sharing economy and turned it into a big business: Airbnb allows individuals to share their homes, while Lyft and Uber transform private cars into common resources. All these are for-profit services, but they take only a fraction of the fees levied, passing the rest on to the owners: In 2013 it was estimated that revenues passing through the sharing economy into people's wallets exceeded $3.5 billion, up 25% from the previous year. Airbnb has exceeded 10 million guest-stays since its launch and now has more than half a million properties listed. Meanwhile Uber has said that it is doubling its revenue every six months.

As a 2014 article in Harvard Business Review noted, the interests of sharing-economy firms and city governments are often aligned, but failing to engage early on with potential regulators can raise the suspicion that companies are trying to exploit loopholes rather than develop a legitimate business model. For example, courts in Frankfurt recently upheld a national ban on Uber, and the service has been banned in several Canadian cities as well. At the heart of many of these debates is whether Uber is, as it claims, operating as a pure technology company, providing a match-making service to willing participants, or whether it is operating in effect as an unlicensed taxi service, which was the conclusion of Calgary's city council. Moreover, a Massachusetts class-action lawsuit asserts that Uber exploits its drivers, misclassifying them as independent contractors to avoid paying them as employees with the same benefits.

Examples from elsewhere in the world shows such fractious relationships with regulators need not be the norm. In February 2014, Amsterdam became the first city to pass so-called "Airbnb friendly" legislation. A law allowing short-term rentals by permanent San Francisco residents was finalized in October 2014, but requires them to collect city hotel taxes and imposes other restrictions. In London, 1970s regulations limiting short-term stays were scrapped, making it easier for Airbnb and others to operate in the city. The British government has even launched an initiative to make the U.K. the "global centre for [the] sharing economy." Similarly, while some traditional operators have fought sharing start-ups, others have chosen to get in on the game themselves: In 2013 Avis paid half a billion dollars for the car-sharing service Zipcar, and Hertz has started a similar service.

Below are a range of additional academic articles that seek to define, understand and analyze the sharing economy, those who participate and its economic impact.

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Latest research
"Owning, Using and Renting: Some Simple Economics of the 'Sharing Economy'"
Horton, John J.; Zeckhauser, Richard J. NBER Working Paper No. 22029, February 2016.

Abstract: "New Internet-based markets enable consumer/owners to rent out their durable goods when not using them. Such markets are modeled to determine ownership, rental rates, quantities, and surplus generated. Both the short run, before consumers can revise their ownership decisions, and the long run, in which they can, are examined to assess how these markets change ownership and consumption. The analysis examines bringing-to-market costs, such as labor costs and transaction costs, and considers the operating platform's pricing problem. A survey of consumers broadly supports the modeling assumptions employed. For example, ownership is determined by individuals' forward-looking assessments of planned usage."

"Does the Sharing Economy Do Any Good?"
Dillahunt, Tawanna, et al. Proceedings of the 19th ACM Conference on Computer Supported Cooperative Work and Social Computing Companion, Pages 197-200, 2016.

Abstract: "Despite the benefits offered by sharing economy, researchers have identified several challenges preventing disadvantaged groups (e.g. low socioeconomic status, un(der)employed and/or users from emerging regions) from receiving the same level of benefits as those from advantaged populations. This panel brings researchers from the sharing economy and mobile crowdsourcing space whose research has identified unique challenges for underserved populations. We consider the opportunities offered by these platforms to disadvantaged communities and examine to what extent these platforms instead may recreate disadvantage, as well as the workarounds communities employ to make these platforms work for them. We examine the opportunities for the CSCW [Computer Supported Cooperative Work] community to address these challenges going forward."

"The Sharing Economy: Reports from Stage One"
Schor, Juliet B. Working paper, Boston College, November 2015.

Abstract: "The sharing economy has generated heated controversy as proponents claim it is bringing efficiency, opportunity and sociability and critics argue it is degrading labor, exacerbating inequality and commodifying daily life. Here we discuss findings from in-depth interviews with providers on three for-profit platforms (Airbnb, Relay Rides and TaskRabbit) and find a mixed picture. Providers are generally pleased with their earning possibilities although there is some evidence that conditions are eroding for providers of general labor services. With respect to sociability and commodification we also find a mixed picture."

"Who Benefits from the 'Sharing' Economy of Airbnb?"
Quattrone, Giovanni, et al. WWW '16 Proceedings of the 25th International Conference on World Wide Web, Pages 1385-1394, 2016.

Abstract: "Sharing economy platforms have become extremely popular in the last few years, and they have changed the way in which we commute, travel, and borrow among many other activities. Despite their popularity among consumers, such companies are poorly regulated. For example, Airbnb, one of the most successful examples of sharing economy platform, is often criticized by regulators and policy makers. While, in theory, municipalities should regulate the emergence of Airbnb through evidence-based policy making, in practice, they engage in a false dichotomy: some municipalities allow the business without imposing any regulation, while others ban it altogether. That is because there is no evidence upon which to draft policies. Here we propose to gather evidence from the Web. After crawling Airbnb data for the entire city of London, we find out where and when Airbnb listings are offered and, by matching such listing information with census and hotel data, we determine the socio-economic conditions of the areas that actually benefit from the hospitality platform. The reality is more nuanced than one would expect, and it has changed over the years. Airbnb demand and offering have changed over time, and traditional regulations have not been able to respond to those changes. That is why, finally, we rely on our data analysis to envision regulations that are responsive to real-time demands, contributing to the emerging idea of 'algorithmic regulation.'"

"Peeking Beneath the Hood of Uber"
Chen, Le, et al. IMC '15 Proceedings of the 2015 ACM Conference on Internet Measurement Conference, Pages 495-508, 2015.

Abstract: "Recently, Uber has emerged as a leader in the "sharing economy". Uber is a "ride sharing" service that matches willing drivers with customers looking for rides. However, unlike other open marketplaces (e.g., AirBnB), Uber is a black-box: they do not provide data about supply or demand, and prices are set dynamically by an opaque "surge pricing" algorithm. The lack of transparency has led to concerns about whether Uber artificially manipulate prices, and whether dynamic prices are fair to customers and drivers. In order to understand the impact of surge pricing on passengers and drivers, we present the first in-depth investigation of Uber. We gathered four weeks of data from Uber by emulating 43 copies of the Uber smartphone app and distributing them throughout downtown San Francisco (SF) and midtown Manhattan. Using our dataset, we are able to characterize the dynamics of Uber in SF and Manhattan, as well as identify key implementation details of Uber's surge price algorithm. Our observations about Uber's surge price algorithm raise important questions about the fairness and transparency of this system."
What is the sharing economy and who participates?
"Avoiding the South Side and the Suburbs: The Geography of Mobile Crowdsourcing Markets"
Jacob Thebault-Spieker; Loren Terveen; Brent Hecht. Urban Environments CSCW 2015, March 14-18, 2015, Vancouver, BC, Canada.

Abstract: "Mobile crowdsourcing markets (e.g., Gigwalk and TaskRabbit) offer crowdworkers tasks situated in the physical world (e.g., checking street signs, running household errands). The geographic nature of these tasks distinguishes these markets from online crowdsourcing markets and raises new, fundamental questions. We carried out a controlled study in the Chicago metropolitan area aimed at addressing two key questions: (1) What geographic factors influence whether a crowdworker will be willing to do a task? (2) What geographic factors influence how much compensation a crowdworker will demand in order to do a task? Quantitative modeling shows that travel distance to the location of the task and the socioeconomic status (SES) of the task area are important factors. Qualitative analysis enriches our modeling, with workers mentioning safety and difficulties getting to a location as key considerations. Our results suggest that lowSES areas are currently less able to take advantage of the benefits of mobile crowdsourcing markets. We discuss the implications of our study for these markets, as well as for 'sharing economy' phenomena like UberX, which have many properties in common with mobile crowdsourcing markets."

"The Sharing Economy: Why People Participate in Collaborative Consumption"
Hamari, Juho; Sjöklint, Mimmi; Ukkonen, Antti. Social Science Research Network, May 2013.

Abstract: "In recent years, [information and communications technologies] have afforded the rise of the so called 'collaborative consumption' (CC) - a form of consumption where people share consumption of goods and services online. CC has been expected to alleviate societal problems such as hyper-consumption, pollution, and poverty by lowering transaction costs related to coordination of economic activities within communities.... The motivation to participate in CC is often regarded as fuelled by the aspirations to do good, but at the same time CC offers participants possible economic benefits. In this paper we investigate the role of these intrinsic and extrinsic motivations in attitudes and participation. The study employs survey data (N=168) and structural equation modeling (SEM-PLS). The results show that, whereas intrinsic motivations strongly predict attitudes, they do not translate as well into usage intentions. Conversely, economic benefits predict use intentions but do not significantly influence attitude. Furthermore, the attitude-behavior gap seems to loom in the consumption behavior related to collaborative consumption; people perceive the activity positively and say good things about it, but they might not still participate in it themselves."

"The Promise of the Sharing Economy among Disadvantaged Communities"
Tawanna R. Dillahunt; Amelia R. Malone. ACM Human Factors in Computing Systems (CHI) 2015, April 18 - 23 2015, Seoul, Republic of Korea. http://dx.doi.org/10.1145/2702123.2702189

Abstract: "The digital-sharing economy presents opportunities for individuals to find temporary employment, generate extra income, increase reciprocity, enhance social interaction, and access resources not otherwise attainable. Although the sharing economy is profitable, little is known about its use among the unemployed or those struggling financially. This paper describes the results of a participatory-design based workshop to investigate the perception and feasibility of finding temporary employment and sharing spare resources using sharing-economy applications. Specifically, this study included 20 individuals seeking employment in a U.S. city suffering economic decline. We identify success factors of the digital-sharing economy to these populations, identify shortcomings and propose mitigation strategies based on prior research related to trust, social capital and theories of collective efficacy. Finally, we contribute new principles that may foster collaborative consumption within this population and identify new concepts for practical employment applications among these populations."

Abstract: "Sharing is a phenomenon as old as humankind, while collaborative consumption and the 'sharing economy' are phenomena born of the Internet age. This paper compares sharing and collaborative consumption and finds that both are growing in popularity today. Examples are given and an assessment is made of the reasons for the current growth in these practices and their implications for businesses still using traditional models of sales and ownership. The old wisdom that we are what we own may need modifying to consider forms of possession and uses that do not involve ownership."

Abstract: "Sharing systems are increasingly challenging sole ownership as the dominant means of obtaining product benefits, making up a market estimated at more than US$100 billion annually in 2010. Consumer options include cell phone minute-sharing plans, frequent-flyer-mile pools, bicycle-sharing programs, and automobile-sharing systems, among many others. However, marketing research has yet to provide a framework for understanding and managing these emergent systems. The authors conceptualize commercial sharing systems within a typology of shared goods. Using three studies, they demonstrate that beyond cost-related benefits of sharing, the perceived risk of scarcity related to sharing is a central determinant of its attractiveness. The results suggest that managers can use perceptions of personal and sharing partners' usage patterns to affect risk perceptions and subsequent propensity to participate in a commercial sharing system."

Abstract: "We examine alternative consumption including collaborative consumption, sharing, and unconsumption (i.e., postconsumption activities such as upcycling, reuse, recycling, etc.) at non-monetary-based private and public sharing events including Really Really Free Markets (RRFMs). These alternative marketplaces (RRFMs) were initially organized by the Anarchist Movement as a form of resistance to the capitalist economic model. However, many consumer groups now utilize this model to stage public sharing events as a means of raising awareness about various issues including sustainability and overconsumption. Participants bring, share, and take goods without any expectation of monetary or other exchange. There is limited research on collaborative consumption and sharing in non-monetary marketplaces. We address this gap by exploring alternative marketplaces, organized by consumers for consumers, utilizing qualitative research methods. Our findings indicate that a sense of community is both a driver of participation and an outcome of these events. Organizers and participants utilize these venues to share knowledge and possessions for various ideological and practical reasons. Our findings also indicate that these events challenge the entrenched notions of exchange and reciprocity. Our research contributes to the literature by highlighting the importance of community, collaboration, and changing consumer mindsets to the success of such sharing efforts."

Abstract: "Sharing economy practices have become increasingly popular in the past years. From swapping systems, network transportation to private kitchens, sharing with strangers appears to be the new urban trend. Although Uber, Airbnb, and other online platforms have democratized the access to a number of services and facilities, multiple concerns have been raised as to the public safety, health and limited liability of these sharing economy practices. In addition, these innovative activities have been contested by professionals offering similar services that claim that sharing economy is opening the door to unfair competition. Regulators are at crossroads: on the one hand, innovation in sharing economy should not be stifled by excessive and outdated regulation; on the other, there is a real need to protect the users of these services from fraud, liability and unskilled service providers. This dilemma is far more complex than it seems since regulators are confronted here with an array of challenging questions: firstly, can these sharing economy practices be qualified as "innovations" worth protecting and encouraging? Secondly, should the regulation of these practices serve the same goals as the existing rules for the equivalent commercial services (e.g. taxi regulations)? Thirdly, how can regulation keep up with the evolving nature of these innovative practices? All these questions, come down to one simple problem: too little is known about the most socially effective ways of consistently regulating and promoting innovation."

Abstract: "This article explores the concept of sharing in three distinct spheres: Web 2.0, whose constitutive activity is sharing (links, photos, status updates, and so on); 'sharing economies' of production and consumption; and intimate interpersonal relationships, in which the therapeutic ethos includes a cultural requirement that we share our emotions. It is argued that a range of distributive and communicative practices - not all of which are entirely new-are converging under the metaphor of sharing. Thus, practices in one sphere are conceptualized in terms of practices from other spheres. What all three spheres of sharing have in common are values such as equality, mutuality, honesty, openness, empathy, and an ethic of care. Moreover, they all challenge prevalent perceptions of the proper boundary between the public and the private."

Abstract: "This essay offers a framework to explain large-scale effective practices of sharing private, excludable goods. It starts with case studies of carpooling and distributed computing as motivating problems. It then suggests a definition for shareable goods as goods that are "lumpy" and "mid-grained" in size, and explains why goods with these characteristics will have systematic overcapacity relative to the requirements of their owners. The Essay next uses comparative transaction costs analysis, focused on information characteristics in particular, combined with an analysis of diversity of motivations, to suggest when social sharing will be better than secondary markets at reallocating this overcapacity to non-owners who require the functionality. The essay concludes with broader observations about the attractiveness of sharing as a modality of economic production as compared to markets and to hierarchies such as firms and government. These observations include a particular emphasis on sharing practices among individuals who are strangers or weakly related; sharing's relationship to technological change; and some implications for contemporary policy choices regarding wireless regulation, intellectual property, and communications network design."
Shared accommodation
Abstract: "The purpose of this study is to examine the role social networking technologies play in the moral economy of alternative tourism. The study takes as its empirical focus the online hospitality exchange network Couchsurfing. Using the concept of 'moral affordances', the analysis outlines the way Couchsurfing's technical systems, software design, and search algorithms enable participants to engage in a moral economy based on the non-commodified provision of accommodation to strangers and personal relations of trust and intimacy. Findings suggest that these affordances are not isolated effects of the technologies themselves, but rather reflect a broader moral landscape in which alternative tourism is performed."

"The Rise of the Sharing Economy: Estimating the Impact of Airbnb on the Hotel Industry"
Zervas, Georgios; Proserpio, Davide and Byers, John; Boston U. School of Management Research Paper No. 2013-16, February 2014.

Abstract: "Airbnb is an online community marketplace facilitating short-term rentals ranging from shared accommodations to entire homes that has now contributed more than ten million worldwide bookings to the so-called sharing economy. Our work addresses a central question facing the hospitality industry: to what extent are Airbnb stays serving as substitutes for hotel stays, and what is the impact on the bottom line of affected hotels? Our focus is the state of Texas, where we identify Airbnb's impact by exploiting significant spatiotemporal variation in the patterns of adoption across city-level markets. Using a dataset we collected spanning all Airbnb listings in Texas and a decade-long panel of quarterly tax revenue for all Texas hotels, we develop a nuanced estimate of Airbnb's material impact on hotel revenues. Our baseline estimate is that a 1% increase in Airbnb listings in Texas results in a 0.05% decrease in quarterly hotel revenues, an estimate compounded by Airbnb's rapid growth.... We find that the impacts are distributed unevenly across the industry, with lower-end hotels and hotels not catering to business travelers being the most affected. Finally, by simulating various regulatory interventions informed by current events, such as limiting Airbnb hosts to a single listing, we find only a moderate mitigating impact on hotel revenues."
Shared transport
Extract: "The P2P ride-sharing platforms like Uber and Lyft have opted for a seemingly infinitely scalable, pure, for-profit business model. As these ride-share platforms have no need to hire drivers or acquire vehicles, Uber and Lyft and others like them, rely on the power of social networking to scale their service. As evidenced by their rapid growth and high valuations, it is clear these ride-share companies have achieved some early success in maximizing value to their customers... However, the private ride-share operators, to date have opted to avoid interaction with local governments. As mentioned earlier, this has resulted in significant challenges to the longevity of their business models due to legal action and other threats posed by local governments and taxi operators. We suggest that this can be explained, in part, by the failure to consider more active engagement with local governments from the beginning. While the go-it-alone approach and avoiding local government and regulation has been a historical modus operandi in other sectors (Konefal, 2013), we suggest that shared mobility service providers would be better served by finding ways to collaborate with local governments if they want to achieve long-term viability. Not only would this entail adhering to regulations in areas such as vehicle and driver safety requirements but also seeking to optimize the citizen and environmental goals to achieve active city support. Any direct financial support, or incentives that promote the use of these P2P networks, such as embedding the ride-sharing data into transit applications, could result in a reduction in costs for riders."

Abstract: "Taxi services are a vital part of urban transportation, and a considerable contributor to traffic congestion and air pollution causing substantial adverse effects on human health. Sharing taxi trips is a possible way of reducing the negative impact of taxi services on cities, but this comes at the expense of passenger discomfort quantifiable in terms of a longer travel time. Due to computational challenges, taxi sharing has traditionally been approached on small scales, such as within airport perimeters, or with dynamical ad hoc heuristics. However, a mathematical framework for the systematic understanding of the tradeoff between collective benefits of sharing and individual passenger discomfort is lacking. Here we introduce the notion of shareability network, which allows us to model the collective benefits of sharing as a function of passenger inconvenience, and to efficiently compute optimal sharing strategies on massive datasets. We apply this framework to a dataset of millions of taxi trips taken in New York City, showing that with increasing but still relatively low passenger discomfort, cumulative trip length can be cut by 40% or more. This benefit comes with reductions in service cost, emissions, and with split fares, hinting toward a wide passenger acceptance of such a shared service. Simulation of a realistic online system demonstrates the feasibility of a shareable taxi service in New York City. Shareability as a function of trip density saturates fast, suggesting effectiveness of the taxi sharing system also in cities with much sparser taxi fleets or when willingness to share is low."

Abstract: " Access-based consumption, defined as transactions that can be market mediated but where no transfer of ownership takes place, is becoming increasingly popular, yet it is not well theorized. This study examines the nature of access as it contrasts to ownership and sharing, specifically the consumer-object, consumer-consumer, and consumer-marketer relationships. Six dimensions are identified to distinguish among the range of access-based consumptionscapes: temporality, anonymity, market mediation, consumer involvement, the type of accessed object, and political consumerism. Access-based consumption is examined in the context of car sharing via an interpretive study of Zipcar consumers. Four outcomes of these dimensions in the context of car sharing are identified: lack of identification, varying significance of use and sign value, negative reciprocity resulting in a big-brother model of governance, and a deterrence of brand community. The implications of our findings for understanding the nature of exchange, consumption, and brand community are discussed."

Abstract: "Since the mid-2000s, public bikesharing (also known as "bike hire") has developed and spread into a new form of mobility in cities across the globe. This paper presents an analysis of the recent increase in the number of public bikesharing systems. Bikesharing is the shared use of a bicycle fleet, which is accessible to the public and serves as a form of public transportation. The initial system designs were pioneered in Europe and, after a series of technological innovations, appear to have matured into a system experiencing widespread adoption. There are also signs that the policy of public bikesharing systems is transferable and is being adopted in other contexts outside Europe. In public policy, the technologies that are transferred can be policies, technologies, ideals or systems. This paper seeks to describe the nature of these systems, how they have spread in time and space, how they have matured in different contexts, and why they have been adopted."

Abstract: "This paper begins by providing an overview of bike share programs, followed by a critical examination of the growing body of literature on these programs.... Several consistent themes have emerged within the growing body of research on bike share programs. Firstly, the importance bike share members place on convenience and value for money appears paramount in their motivation to sign up and use these programs. Secondly, and somewhat counter intuitively, scheme members are more likely to own and use private bicycles than nonmembers. Thirdly, users demonstrate a greater reluctance to wear helmets than private bicycle riders and helmets have acted as a deterrent in jurisdictions in which helmets are mandatory. Finally, and perhaps most importantly from a sustainable transport perspective, the majority of scheme users are substituting from sustainable modes of transport rather than the car."
Online ratings and reputation
Absract: "Reciprocity in feedback giving distorts the production and content of reputation information in a market, hampering trust and trade efficiency. Guided by feedback patterns observed on eBay and other platforms, we run laboratory experiments to investigate how reciprocity can be managed by changes in the way feedback information flows through the system, leading to more accurate reputation information, more trust, and more efficient trade. We discuss the implications for theory building and for managing the redesign of market trust systems."

Abstract: "Trust and reputation systems represent a significant trend in decision support for Internet mediated service provision. The basic idea is to let parties rate each other, for example after the completion of a transaction, and use the aggregated ratings about a given party to derive a trust or reputation score, which can assist other parties in deciding whether or not to transact with that party in the future. A natural side effect is that it also provides an incentive for good behaviour, and therefore tends to have a positive effect on market quality. Reputation systems can be called collaborative sanctioning systems to reflect their collaborative nature, and are related to collaborative filtering systems. Reputation systems are already being used in successful commercial online applications. There is also a rapidly growing literature around trust and reputation systems, but unfortunately this activity is not very coherent. The purpose of this article is to give an overview of existing and proposed systems that can be used to derive measures of trust and reputation for Internet transactions, to analyse the current trends and developments in this area, and to propose a research agenda for trust and reputation systems."
Keywords: research roundup, technology, public bicycle, ride-sharing, ridesharing, bicycle-share systems, transportation, tourism, hotels, bikeshare

Last updated: June 3, 2016

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Uber, Airbnb and consequences of the sharing economy: Research roundup - Journalist's Resource

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The leading businesses that are advancing the concept of the "sharing economy" are in many respects no longer insurgents and newcomers. The size and scale of Uber, Airbnb and several other firms now rival, or even surpass, those of some of the world's largest businesses in transportation, hospitality and other sectors.

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Why is New York City cracking down on Airbnb?

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Never mind all the stories about unemployment. American businesses are still clamoring for workers. They just may not need them for a full 40-hour week.

"Temps" have long been the go-to solution for businesses that need extra hands during busy production cycles or for special projects. In the old days, when you needed temporary help, you had one real option: The temp agency. Temporary staffing agencies-which are still around, mind you-might specialize in administrative workers (to handle that filing project that no one else wanted to touch) or hook you up with programmers or project managers (for more complicated, but temporary, projects). Either way, the relationship was generally between you (the employer) and the temp agency. You often had limited control over who came to work on Monday morning and even less over how much they got paid. The agency controlled the relationship, taking the employee's fee and excising a healthy cut before passing the remainder on to the worker as a salary.

This system worked for years. Many temps were happy to bounce from job to job, much like substitute teachers, waiting for the call as to where they'd report the following day for work. And many temp agencies treated their workers as regular employees, withholding taxes and sometimes even offering benefits.

But that model isn't proving sustainable. The deep cuts temp agencies take-up to half of a worker's take-home pay-means most temps can't make much of a living with irregular work. Meanwhile, employers are increasingly on the hunt for deeply qualified individuals with specialized skills. Those individuals may be located anywhere in the world-and willing to work for much less than previously imagined.

Online staffing services are a shortcut to finding these individuals. Offering a database of professionals-sometimes these workers number in the millions-you can now find just about any type of worker with just a few clicks. On most sites, you can either post your project and have contractors bid for it, or search for workers and reach out to the ones you are interested in directly. The sites all handle payment services and often curate the workers (though the degree to which candidates are vetted varies widely); but, typically, you can at least see who you're dealing with based on the feedback and ratings of prior clients.

That said, as a group these services offer quite a bit of variety, since each has dug into its own niche. So study up on how they differ before you decide to do business with one. Here's a closer look at seven established and upcoming online staffing services.

Elance

With 2.5 million registered freelancers and half a million business users, Elance says it is growing at a 50 percent annual clip, cementing its status as one of the largest online staffing services. The model is fairly typical: Companies can either hire workers directly based on their online credentials or post projects and ask for bids. The latter method is especially common for those in need of Elance's bread-and-butter users: technology and engineering workers and providers of creative services, such as freelance blog writers. Billing is simple: 8.75 percent is added to all projects or hourly assignments.

Elance has one of the more full-featured escrow systems in the industry, and on complex projects it allows for multiple milestones to be created and agreed upon between the contractor and the employer. Most of these workers are treated as 1099 employees. Typically, it's up to the business to handle any forms that need to be sent, though Elance can do it for you. The company says it does work with a handful of companies that use Elancers as W2 workers, and it says that it is also VAT-compliant (VAT is a special consumption tax popular in Europe) for clients located in Europe, Australia, and Canada.

Freelancer.com

With over 8 million registered contractors, Freelancer.com is the largest temp staffing site on the Web. With such a vast user base, Freelancer.com is designed to appeal to the masses, and businesses can either post a project, find freelancers directly, or even post contests ("Design our logo; the one we choose wins the prize money!"). Contests are a major new focus for the company and are something it's likely to continue to push heavily. Types of workers run the gamut, but the most popular skill sets fall in line with the industry: software and Web development, graphic design, and other creative work.

Freelancer's fee structure-unique among e-staffing services-is complicated and is based on the type of membership the employer has chosen. Standard ($25 per month) and Premium ($50 per month) employers pay nothing for posts. Basic ($5 per month), Plus ($10 per month), and Free members pay a 3 percent commission or a flat $3 fee for listings, whichever is greater. Freelancers also have to pay a commission on work they undertake, ranging from 3 percent/$3 to 10 percent/$10, along a sliding scale similar to the one for employers. Full-time work isn't subject to any fees until the value of the contract exceeds $5000. Reflecting its large size and global approach, the site operates in 30 languages and allows transactions in 15 different currencies.

oDesk

Alongside Elance and Freelancer.com, oDesk is the third leg of the triumvirate of massive online staffing sites. With 4 million workers registered, it has a familiar design and approach, trying to match up thousands of workers in any given field with the right employers. Tech work of all sorts is, of course, a focus, but you'll also find a larger than usual portion of business services contractors, such as accountants and HR professionals. Employers pay a flat 10 percent fee on top of any projects listed or freelancers hired.

oDesk offers a larger proportion of business services contractors than the other sites to.

While oDesk looks a lot like its two bigger competitors, it takes a longer-term approach to work than the other big sites. The company notes that it aims to "replicate traditional work relationships," with the average project undertaken on the site lasting nine full weeks. That's a stark contrast to the work most online staffing sites handle, which can frequently be completed in a matter of days.

Staff.com

With just over 66,000 workers listed, Staff.com may look like a tiny operation, and in many respects it is. In fact, you can think of this service as more of a virtual headhunter operation. Recruiters find and review potential contractors, and in many cases Staff.com calls a contractor personally to discuss whether a potential job is right for them. This is a far cry from the all-too-frequent bidding "race to the bottom" that you see on larger sites, with contractors undercutting one another in the hopes of landing a gig. The company's cut is 10 percent.

In keeping with this approach, Staff.com focuses not project-based jobs but rather on long-term staffing-though all work is done off-site. (Most of Staff.com's workers reside in Southeast Asia.) Worker profiles are very detailed and often include personal introductory videos. Looking for a steady bookkeeper or Web developer that you can count on week after week? Staff.com may be just the ticket.

TaskRabbit for Business

If you've ever hired a TaskRabbit contractor to help you move some furniture or to build an Ikea bookcase for you, you know how invaluable this very short-term labor service can be for personal needs. Recently, TaskRabbit expanded into business services too, taking much the same approach as it does to more consumer-oriented jobs.

In contrast to the vast majority of other online staffing sites, TaskRabbit for Business jobs mostly take place on-site, at the employer's workplace, as opposed to off-site and online. (TaskRabbit does, however, support both types of work.) Listed jobs are generally fairly low-end: Reception work, light clerical duties like faxing and filing, and shelf stocking are the most common jobs listed on the site. The employer pays a 20 percent surcharge for 1099 workers and 26 percent for W-2 workers, making it one of the more expensive staffing options on the Web.

TaskRabbit for Business says it is proud of its screening process-which includes five different background checks, more than you probably ran on your last receptionist-and touts its workers' impressive credentials: The vast majority of TaskRabbits have a college degree, and a full 5 percent have doctorates. Be sure to ask your new file clerk about their thesis!

Toptal

Toptal is careful to distinguish itself from the bulk of e-staffing sites, describing itself as a new "McKinsey meets Elance model," according to Toptal's CEO. Here, the focus is on quality, with a rigorous screening of applicants submit to an in-depth interview process and must complete a small test project on deadline. As a result, Toptal works with only about 1000 registered contractors, all in the high-tech world-either in software engineering and design or high-end IT support, such as database administration.

TopTal performs the deepest screening of applicants

Toptal's fees vary and are not disclosed. The service can take anywhere from a 2 to 40 percent cut of a contract, depending on a wide array of factors. Toptal can also help employers build teams of developers. And companies that want to hire a Toptal contractor full-time can do so by paying a contract buyout fee-typically about $30,000 per engineer. This may sound very expensive, but remember that Toptal is not the place to go to have someone design the icon for your new app. Rather, like a headhunter, the service is more akin to the place you go to find the talent to get your new startup up and running (and hopefully stay with you for the long haul).

Ziptask

Ziptask is a very small and very new staffing site, with only about 500 beta employers and a few thousand freelancers at present. The company describes itself as a "fully managed outsourcing platform," and the difference here is in the way Ziptask manages the contractor relationship. Ziptask employs project managers that oversee any freelancers you hire: Interviewing, managing, reviewing work, and so on. This forces projects into a more structured arrangement: Using the site is more like working with a project management tool like Basecamp than like using job site like Elance. There's not even a way to search for contractors; Ziptask deals with all of that itself to find the best workers for you.

It's surprising that, given all the added value Ziptask provides, it takes only a 3 percent cut of each payment. However, you also have less control over how much your project will actually cost: In addition to handling the hiring, Ziptask also handles the work of estimating the job's cost and duration. For truly hands-off employment, though, the approach is enticing.

The Bottom Line

If you need a job done quickly, and cost is your greatest concern, one of the big e-ployment services like Elance, Freelancer, and oDesk are all good bets. If you're looking for a longer-term relationship with a worker, but aren't ready to hire someone full time, one of the smaller firms, like Staff.com or Toptal, may be more compelling. Finally, TaskRabbit's heavy background checking make it an ideal pick when you need someone on-site at your place of business, and you want to be sure they're going to show up come Monday.

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Inside e-ployment: Online staffing services put temporary labor within reach of small businesses

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Never mind all the stories about unemployment. American businesses are still clamoring for workers. They just may not need them for a full 40-hour week. "Temps" have long been the go-to solution for businesses that need extra hands during busy production cycles or for special projects.

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The sharing concept has created markets out of things that wouldn't have been considered monetizable assets before

Dubbed "collaborative consumption" - or " the sharing economy " - this movement represents the newly cemented intersection of online social networking, mobile technology, the minimalist movement and heightened penny-pinching brought on by lingering economic uncertainties.

The sharing concept has created markets out of things that wouldn't have been considered monetizable assets before.

Peer-to-peer hotels

A half-dozen upstarts have emerged in the last two years - with names like 9Flats, HouseTrip, Wimdu and Airbnb - offering the convenience of a hotel, the comforts of a home and the price tag of an up-market hostel - let's call them peer-to-peer hotels. It is the most prominent example of a huge new "sharing economy", in which people rent beds, cars, boats and other assets directly from each other, co-ordinated via the internet.

You might think this is no different from running a bed-and-breakfast, owning a timeshare or participating in a car pool. But technology has reduced transaction costs, making sharing assets cheaper and easier than ever - and therefore possible on a much larger scale.

The big change is the availability of more data about people and things, which allows physical assets to be disaggregated and consumed as services. Before the internet, renting a surfboard, a power tool or a parking space from someone else was feasible, but was usually more trouble than it was worth.

Collective sharing, while a still-growing trend, may also have a broader economic impact. While the classic Keynesian economic view suggests healthy consumer consumption spurs economic growth, sharing encourages more-efficient use of existing goods and diverts capital to other types of consumption and investment.

This emerging model is now big and disruptive enough for regulators and companies to have woken up to it. That is a sign of its immense potential. It is time to start caring about sharing.

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The rise of the sharing economy - peer-to-peer hotels

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Dubbed "collaborative consumption" - or " the sharing economy " - this movement represents the newly cemented intersection of online social networking, mobile technology, the minimalist movement and heightened penny-pinching brought on by lingering economic uncertainties. The sharing concept has created markets out of things that wouldn't have been considered monetizable assets before.

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A report of the struggles with regulations in a shared economy

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A report of the struggles with regulations in a shared economy

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"The world's largest accommodation provider,
Airbnb, owns no property."

The Airbnb story started back in 2008, with the two founders, Joe Gebbia and Brian Chesky (Nathan Biecharczyk was invited to join later), and 3 air mattresses in San Francisco, California. Their problem: they couldn't pay rent. They set up a simple website with a map and rented out three mattresses and promised home-made breakfast. Three people came and they decided to build on it. They refined the website with money from selling cereal boxes during the presidential campaign in 2008, and took high-quality pictures of the rented space to boost click-rates. In the winter of 2012, Airbnb overtakes Hilton Hotels in nights booked. Now, it has over 1,500,000 listings in 34,000 cities and 190 countries. Bookings can be made online and on mobile devices. In 2015, the value of the company was $25.5 billion.

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Airbnb Business Model - Business Model Toolbox

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"The world's largest accommodation provider, Airbnb, owns no property." The Airbnb story started back in 2008, with the two founders, Joe Gebbia and Brian Chesky (Nathan Biecharczyk was invited to join later), and 3 air mattresses in San Francisco, California. Their problem: they couldn't pay rent.

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The federalist society. (2017, January 5). the rise of the sharing economy [Video file]. Retrieved December 12, 2017, from https://www.youtube.com/watch?v=Dm3ZDnT9Zag

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The "Sharing Economy" is a complex phenomenon that has disrupted industries and transformed how we live and work, but experts can't even agree on what to call it. Lawyers, public policy experts, academics and workers weigh in to define this dynamic phenomenon and to discuss legal and regulatory issues that emerge as these platforms play an increasingly role in our society.

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Shareconomy (sharing economy) | Sample Reel

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an article from Stanford University about the law and the changing economy

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In a way the future of the sharing economy, the array of high-tech firms revolutionizing the way Americans take vacations, commute, and contract for personal services, may turn on a legal precedent about vegetables and farm labor. Consider Uber Technologies Inc., the pioneering ride-hailing firm. The company has a policy of treating its drivers as independent contractors rather than employees. That has saved it a ton of money, but has also brought lawsuits from the drivers, who say they've been short-changed. In their legal arsenal is a landmark 1989 decision by the California Supreme Court, S. G. Borello & Sons, Inc. v. Department of Industrial Relations, which gave migrant farm workers hired to harvest a crop of cucumbers rights as employees.

But it isn't the only legal issue cropping up. While sharing economy companies are changing the lives and lifestyles of millions, judges, legislators, and regulators are struggling to decide the rules by which they should operate.

One challenge is that many of these startups don't see themselves as traditional companies, but as technology "platforms" where independent buyers and sellers come to transact business-exchanging services, selling their wares, renting out their homes. And this new business model has had widespread effects on a number of legal fronts, including tort liability, municipal regulation, discrimination, and privacy.

Who ought to be liable if a driver for a ride-hailing firm runs over a pedestrian? Or a room-sharing host attacks a guest? And studies have shown significant evidence of discrimination among ride-sharing and room-sharing companies. So who is responsible when minorities or the disabled are denied access to the new services?

These are just a few of the questions that legal academics and lawyers in the field are tackling as the new economy comes of age.

New technology has long challenged the legal system, defying existing structures. If Google, for example, had limited itself early on with a cautious view of traditional copyright law, its founders might still be back in graduate school.

Phil Malone, professor of law and director of the Juelsgaard Intellectual Property and Innovation Clinic, says the mindset of many entrepreneurs is this: "'Why should we have to kill or delay our great idea that would improve life for many people just because [to borrow from Dickens] 'the law is an ass'? Their view is the classic 'better to seek forgiveness than ask for permission.'"

"That's what makes companies like Uber and Airbnb so interesting," Malone says. "They just went out and did it. They established facts on the ground. Regulators looked around, surprised, and rushed in after the fact to try to figure out what happened and what to do about it."

As these companies mature, vulnerabilities in their strategies are beginning to appear.

The challenge for policymakers, Malone and other experts say, is to establish rules and regulations that work without chilling really good ideas. The challenge for the companies is to acknowledge the interests that regulators have in protecting the public, and not appear to be above the law.

Steve Siger, JD '08, a former regulatory counsel at Uber who is now a lawyer at Thumbtack, a professional services marketplace, says the legal terrain has moved further than some people might think. Firms, like Uber and Airbnb, after all, have become household names worth billions.

"As little as two or three years ago, there was an open question whether ride-sharing and home-sharing would exist or should have a right to exist," Siger says. "I think the discussion has moved on at this point. Everyone now agrees the companies are here to stay. The business model is here to stay. How we regulate them is now the question."

"There is the litigation, attempting to apply existing rules to these new industries, which is a backward-looking approach," he adds. "I think the more interesting question is a forward-looking one: 'What is the right answer and what should the rules be?'"

A Taking Economy?

Signs of hard-edge capitalism in the sharing economy-so-called because it helps people leverage their personal resources, for example, leasing a spare bedroom to make spare cash-have raised questions about whether the name fairly describes what is really going on.

"The sharing economy seems poised to do a great deal of taking-extracting more and more value from participants while continuing to enjoy the veneer of a disruptive, socially minded enterprise," according to an article forthcoming in the Columbia Law Review titled "The Taking Economy." Co-author Ryan Calo, a professor at the University of Washington law school who is an affiliate scholar at Stanford Law's Center for Internet and Society, says sharing economy companies are accumulating vast troves of data information about consumers with little oversight and are positioned to leverage the power in problematic ways.

Businesses that have lived by the old rules have been hardly welcoming to the upstarts. Taxi companies and labor unions greeted Uber with protests and violence after it launched service in Europe. In France, its CEO was arrested and jailed for operating an illegal business and cars and tires were burned in the streets.

The tensions have culminated in a case before the European Court of Justice. The central question: Is Uber a transport company, subject to regulations dating back to the 1960s, or an "information society service," protected under an EU law that limits regulations that infringe on the "freedom to provide services."

"Existing EU laws are a clumsy fit for Uber," wrote Claire Chapla, JD '16, in an analysis of the case for the Transatlantic Technology Law Forum, a joint initiative of SLS and the University of Vienna School of Law.

Chapla, a clerk on the Tenth Circuit Court of Appeals, suggests the EU create a new regulatory category in the vein of a California licensing law that requires transportation network companies to have at least $1 million in insurance, mandatory vehicle inspections and driver training programs, "zero tolerance" drug and alcohol policies, and criminal background checks. The court is expected to resolve what Bloomberg calls "Uber's identity crisis" as early as this spring.

Legal Instruments

The sharing economy does have some powerful legal tools at its disposal. Under Section 230 of the Communications Decency Act (CDA) of 1996, ISPs (internet service providers) and other "interactive computer service providers" are immunized from liability for user-generated content. The law protects Facebook over scandalous postings on its social network and Amazon from suits over negative reviews.

Online marketplaces are also taking advantage of the law: eBay Inc., one of the pioneers of the sharing economy, has used Section 230 to protect itself against lawsuits arising from products sold on its platform that are allegedly defective or infringe patents and other intellectual property.

The expanding sharing economy is testing the boundaries of Section 230, says Spencer Jones, eBay's legal counsel for litigation and asset protection.

"We are a platform bringing people together 'virtually' to the sharing economy. Companies like Uber and Airbnb are bringing people together in the physical universe," Jones, JD '07, observes. "It has taken the sharing economy to a whole new level. And there is additional risk and exposure: Is this what Congress intended to cover with its CDA immunity?"

Airbnb and HomeAway, a vacation-home marketplace, tried to use Section 230 to block portions of a home-sharing ordinance in San Francisco. In 2014, the city enacted a measure permitting residents to rent out their homes so long as they registered and paid a fee. Compliance was poor, however, so the rules were changed, making the platforms liable if they did business with unregistered homeowners. Airbnb and HomeAway sued in 2016 alleging that the requirement that they verify the status of listing renters violated Section 230.

U.S. District Judge James Donato, JD '88, ruled against the companies, however, denying a motion for an injunction against the ordinance last fall. Donato noted that the ordinance penalizes Airbnb, not for advertising an unregistered unit, but for booking one and collecting a fee. By holding the company liable for its own conduct, rather than third-party content, he reasoned, the ordinance did not violate Section 230. The two sides announced they had reached a settlement earlier this May.

The Disabled

The National Federation of the Blind of California filed a lawsuit in federal court in San Francisco in 2014 alleging that drivers for Uber denied access to individuals with service animals in violation of the Americans with Disabilities Act (ADA) and California state disability access laws. The complaint cited dozens of instances where blind customers had summoned rides only to have drivers pull away when they noticed the customers had service animals.

Initially, the company argued that it was not a "public accommodation," and so was not covered under the law. Ultimately, it agreed to a settlement, which became effective in January 2017. Terms call for improved driver education, stricter driver removal policies, improved customer service and complaint processes, monitoring and reporting, and testing.

"This service can be a really valuable asset in the transportation tool chest that blind people have at their disposal. But we need to make sure it works for everybody," says Michael Nunez, a San Francisco lawyer who helped represent the plaintiffs in the case. Nunez, JD '11, is himself blind and uses a service animal.

"People in the disability community are excited about the sharing economy," says Rabia Belt, an assistant professor of law and a legal historian whose scholarship focuses on disability and citizenship. "But people are worried about discrimination and concerned about remedies to that discrimination."

Owner-occupied residences, she notes, are generally exempt from complying with the ADA, meaning, for example, that people who rent out a room in their home through an online marketplace do not have to ensure it is wheelchair accessible.

Ride-sharing companies' plans to deploy brand-new fleets of driverless SUVs do hold out some hope for disabled citizens with non-collapsible wheelchairs. (An industry-friendly provision in the ADA has exempted taxi companies from having to serve those customers so long as they operate older vehicles of a certain limited size.)

But whether the new entrants will embrace the opportunity to help this under-served group is far from clear. "The question of how inclusive this future will be for individuals with disabilities remains an open one," wrote Bryan Casey, JD '18, in an essay about autonomous vehicles and the ADA, which was published in December in the online edition of the Stanford Law Review.

Liability Concerns

Another legal battleground has been whether sharing economy companies are liable if their workers hurt someone on the job.

Employers may be held vicariously liable for the torts of employees, as long as the tort is committed within the scope of employment, notes Nora Freeman Engstrom, JD '02, professor of law and associate dean for curriculum. But, if the tort is committed by an independent contractor, the business is typically off the hook. For companies like Uber that straddle the categories, the analysis is trickier, Engstrom says.

In 2015, Uber was sued in U.S. district court in San Francisco by two women who alleged they were sexually assaulted by Uber drivers in separate incidents. The company moved to dismiss, arguing there was no employment relationship between the company and the drivers and, even if there was, the company was relieved of liability because sexual assault is outside the scope of an employee's duties.

"Uber wants to have it both ways," says Sara Peters, JD '08, a San Francisco personal injury lawyer who represents another Uber customer, suing the company for assault. "The company advises women that taking an Uber is a better option than riding with a stranger or driving drunk. In court, the company is saying these drivers are strangers."

U.S. District Judge Susan Illston, JD '73, denied Uber's bid to dismiss the case, saying "plaintiffs have alleged sufficient facts to claim plausibly that an employment relationship exists" and that "foreseeability and policy rationales weigh in favor of allowing the complaint to move forward on the scope of employment question."

"Assaults of this nature are exactly why customers would expect taxi companies to perform background checks of their drivers," Illston wrote. "Holding Uber liable could also forward the underlying policy goals of respondeat superior, including prevention of future injuries and assurance of compensation to victims." Court records indicate the case was settled before trial.

Anti-Competition

Uber is also facing charges that its business practices are anti-competitive. A lawsuit seeking class action status in federal court in New York alleges that by setting fares for drivers, it is engaged in illegal price-fixing in violation of Section 1 of the Sherman Antitrust Act.

"The issue is whether Uber has a right to set the drivers' prices given that it denies that they are employees," says Doug Melamed, a professor of the practice of law and an antitrust expert. "It will probably turn on whether Uber has created a new product or whether, instead, it has taken drivers who would otherwise compete and has orchestrated a price-fixing agreement among them." His judgment: Uber likely prevails.

Some of the fiercest battles in the sharing economy have been over the legal status of workers. Most are classified as independent contractors, meaning companies do not have to pay them benefits such as health insurance, workers' compensation, and overtime.

Critics say despite flexible work hours and new income opportunities, the sharing economy is contributing to a trend toward workers in low-paying jobs. A survey last year by the Pew Research Center found that sharing economy workers tend to be poorer and are more likely to be minorities than the population at large. The New York Times picked up on the study in a recent editorial titled "The Gig Economy's False Promise."

Uber, Lyft, food-delivery companies DoorDash and GrubHub, and Handy, an on-demand house-cleaning and home-repair services firm, are just a few of the companies that have been sued by workers alleging they have been misclassified and mistreated.

In California, whether a worker is an employee or a contractor turns on the "right to control" the work including the manner and means in which it is performed. And some courts have sided with the workers under the test, which comes from the same pivotal 1989 California Supreme Court case that pitted a group of migrant farm workers against a major grower in the state. However, others have said the law is badly in need of an update.

"The test the California courts have developed over the 20th century for classifying workers isn't very helpful in addressing this 21st-century problem," observed Vince Chhabria, a U.S. district judge in San Francisco, in a case against Lyft, adding that "the jury in this case will be handed a square peg and asked to choose between two round holes." Under a settlement reached in March, Lyft agreed to pay the workers $27 million, but is allowed to continue to treat them as contractors.

Arbitration

The sharing economy is also hastening a trend toward arbitration. Stephen Kane, JD '06, has launched an alternative dispute resolution website, www.FairClaims.com, to handle the rush of small claims disputes. Such disputes, a bungled plumbing job or a dirty holiday rental house, have arisen among users of sharing economy platforms. "Arbitration is an important, powerful tool, if done the right way," Kane says.

The companies are also using arbitration to defuse litigation threats against themselves. Most standard terms of service now require that users agree to resolve any and all disputes in arbitration rather than court. Users who consent are often agreeing to bring claims individually, rather than as class action lawsuits-a mechanism to resolve far-flung disputes that some say has been abused in recent years.

"For a small company, even the filing of a class action, meritorious or not, can be an existential threat," says Albert Giang, JD '02, a partner at Boies Schiller Flexner LLP in Los Angeles, who represents Lyft, Airbnb, and other smaller sharing economy firms.

Deborah Hensler, the Judge John W. Ford Professor of Dispute Resolution and associate dean for graduate studies, says forcing consumers to waive judicial rights is not good public policy. But, she adds, the practice is doubtless good for the companies. "If I were a major corporation and had an outside lawyer who didn't include this in a contract, I think I would probably sue that lawyer," Hensler says.

Last November, Christopher Cooper, JD '93, a U.S. district judge in Washington, D.C., dismissed a lawsuit that accused Airbnb of race discrimination-citing a terms of service requirement that all disputes be resolved by an arbitrator. The plaintiff, an African-American, had contacted an Airbnb host about a place to stay for a weekend getaway in Philadelphia and was rejected. When he applied through a separate account, using a pseudonym and a photograph of a white person, the same host was more than happy to accommodate him.

Cooper acknowledges "the widespread and controversial practice of requiring consumers to relinquish their fundamental right to a jury trial-and forgo class actions-as a condition of simply participating in today's digital economy." But, he says, "mutual arbitration provisions in electronic contracts-so long as their existence is made reasonably known to consumers-are enforceable, in commercial disputes and discrimination cases alike."

Uber is hoping an arbitration provision will be its trump card in defending a closely watched class action lawsuit filed in 2013 in San Francisco federal court by 385,000 drivers in California and Massachusetts. The case is considered a bellwether in the battle over whether workers in the sharing economy are employees or contractors.

Lawyers for the drivers claim the arbitration provision restricts their right as employees to engage in collective action in violation of the National Labor Relations Act. Without taking a position on whether the drivers are employees, the National Labor Relations Board has weighed in, calling the issue one of "national significance." An appeals court has set a hearing for September.

Bill Gould, the Charles A. Beardsley Professor of Law, Emeritus, and a former chairman of the NLRB, says he sympathizes with the workers and believes arbitration clauses that bar class actions are "inconsistent with concerted activity." In January, the U.S. Supreme Court agreed to consider the issue in an unrelated case. Gould is not optimistic about the workers' chances.

"I think the many Supreme Court decisions promoting employer-promulgated arbitration have basically snuffed out the rights of employees who are suing businesses," Gould says. "I would not want to bet the farm on the proposition that the Court will depart from its thus far expressed support for this kind of arbitration."

Rick Schmitt is an attorney and former staff writer for the Wall Street Journal and Los Angeles Times.

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The Sharing Economy: Can the Law Keep Pace with Innovation? | Stanford Law School

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In a way the future of the sharing economy, the array of high-tech firms revolutionizing the way Americans take vacations, commute, and contract for personal services, may turn on a legal precedent about vegetables and farm labor. Consider Uber Technologies Inc., the pioneering ride-hailing firm.

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Earlier this month an article in the South China Morning Post underscored just how bizarre the world of business has become. A Chinese startup offering to lend umbrellas to urbanites on the go was reportedly dealt a major blow when 300,000 of its umbrellas went missing within mere months of the venture launching. The umbrella-sharing scheme required customers to make an initial deposit equivalent to just over £2 after which they were charged 6p for every half hour of use.

Predictably perhaps, problems stemmed from the portability of the object upon which the whole system relied: busy city dwellers clearly liked the idea of having prompt access to a sometimes unwieldy umbrella when the heavens opened, but they were then taking the umbrellas home, stashing them away and forgetting about them altogether.

The company appeared to have overestimated the trust and reliability of its consumer base, while disregarding the fact that humans are inherently selfish.

Fortunately, the damage in this case appears not to have been prohibitive. Sharing E Umbrella - as the company is called - has indicated that it's heading back to the drawing board and is hoping to re-launch with 30 million new umbrellas by the end of the year. But the case nonetheless serves as a powerful metaphor for the exploding sharing economy and the risks it bears.

The anecdote is also suggestive of the fact that - as the sharing economy becomes a staple of our vocabulary and starts to penetrate most sectors of global industry - we may well be underestimating one highly unpredictable X Factor. Namely, the human factor: We can't be trusted. Nothing we do is ever altruistic and - to make matters worse - we're often quite stupid. Sorry, but it's true.

The sharing economy is gargantuan. A recent research report published by Bank of America Merrill Lynch estimates the value of it is about $250bn (£190bn) and it's growing rapidly. It's not hard to understand why it's flourished in recent years. It aims to unlock the value of unused, or underused, assets, saving us time, hassle and - crucially - money. We're still scarred by one of the worst recessions in history and many of us are natives of the World Wide Web. That's what defines our habits.

We want top service, at rock-bottom prices, at the click of a button within the hour, and so the seeds have been sown for the emergence of car-sharing apps (Uber), rental companies (AirBnB), collaborative work spaces (WeWork) and entertainment sites (Spotify), to name but a few.

As availability grows, though, so too does the scope for trouble.

Earlier this month, Chinese news agency Xinhua reported that a company was forced to temporarily shut down a string of shared napping pods for sleep-deprived workers in Beijing, Shanghai and Chengdu, on concerns the capsules could become a shelter for criminals.

Rachel Botsman, the author of the book The Rise Of Collaborative Consumption, told the publication Fast Company that we're experiencing "a seismic shift from individual getting and spending towards a rediscovery of collective good."

Except, to my mind, the problem seems to be that we're not actually hardwired to care about this collective good. What we care about is maximising our own resources. We want a cheap holiday and are willing to throw caution to the wind. While we're away, we don't want our apartment to sit empty when we could be using it to foot the bill of said holiday. We want a car to pick us up and take us home. Getting a cheap ride is more important than knowing that our driver is safe, reliable and honest.

Our overwhelming demand for an effortless existence is encouraging the rise of supply at such a rapid pace that we risk losing sight of the basics: protection and regulation.

Perhaps the most distressing evidence of things getting out of control has been served up by Uber - a veritable doyenne of the sharing economy. Sexual assault claims levelled against drivers for the company have been blamed by campaigners on lacklustre background checks. Could that be because of how fast the company has expanded?

Only last week, reports surfaced of a woman holding AirBnB accountable for an alleged assault. In a first-of-its-kind lawsuit she's reportedly claiming to have been attacked by a host who had not been screened by the company before being able to list his property on the site. A spokesman for Airbnb later told me that a background check had been done on the host and that there had been no prior convictions.

The sharing economy raises a host of questions around working rights, benefits, exploitation, regulation and standards. In the UK at least some have been addressed in the recent Taylor Review. But perhaps the inherent problem with many of the biggest players is that their business models are based on trust, yet they're growing so quickly that they're forgetting that.

I don't think the sharing economy is going away. The interconnected nature of the way we live will see to it that it doesn't. I'm a user and fan of AirBnB and other services that fall within this exciting and murky universe. I've yet to have a truly negative experience. Some of the business models within the sharing economy are brilliant and deeply innovative. I wish I'd thought of them myself. Many constituents are now diversifying, offering premium services that offer a more personalised and higher quality experience.

But it's a constant balancing act between greed and trust, value and cost, convenience and risk.

I certainly don't think of myself as an untrustworthy person, but I reckon even I'd be capable of stashing away an umbrella and forgetting about it. Perhaps not in London, but you get my point.
You can hear Josie Cox discussing the tech bubble burst on our Double Take podcast here
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The sharing economy is failing because people can't be trusted

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Earlier this month an article in the South China Morning Post underscored just how bizarre the world of business has become. A Chinese startup offering to lend umbrellas to urbanites on the go was reportedly dealt a major blow when 300,000 of its umbrellas went missing within mere months of the venture launching.

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M. Munkøe, M. (2017, February 1). Regulating the European Sharing Economy: State of Play and Challenges. Retrieved December 12, 2017, from https://archive.intereconomics.eu/year/2017/1/regulating-the-european-sharing-economy-state-of-play-and-challenges/

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Over the last few years, the sharing economy has gone from niche to mainstream. From its humble beginnings as Air Bed and Breakfast, which hosted conference attendees on airbeds in the home of its founders, Airbnb has become a global entity with a market capitalisation that exceeds those of "traditional" major hotel chains, while Uber, Didi and Lyft have made headlines by attracting investments in the range of several billion dollars.

The European Commission, based on a PwC study, estimated the size of the European "collaborative economy" at €28 billion in 2015. This figure is likely to become a common point of reference, even though it is actually not restricted to the sharing economy but also encompasses other forms of economic activity such as crowdfunding. Car ride-sharing and accommodation, the two major components of the sharing economy, accounted for €20 billion. While consensus has not yet emerged concerning the definition of sharing economy, and the term is often loosely applied to a number of very disparate business models and internet platforms, the common notion appears to run along the lines that the sharing economy is 1) peer-to-peer based rather than business-to-consumer or business-to-business based, and 2) based on rental or similar transactions/purchase of access rather than a permanent change of ownership/sale.

Despite the uncertainties concerning the size and indeed the very conceptualisation of the sharing economy, it is clear that it has grown to become a substantial transformative force in the European economy that cannot be ignored by regulators. Accordingly, national and European policymakers are preparing to step in and evaluate and update regulation, but they are often confounded by the peculiar nature of the sharing economy, which circumvents many of the conceptualisations and ways of doing things that regulation traditionally presupposes. In the following, first the economics of the sharing economy are considered as well as the current state of play in terms of usage, and then the current regulatory challenges and developments that arise from the development and growth of sharing economy services are discussed.

The economics of sharing

The advent of sharing platforms stems from two developments that are both in turn consequences of digitalisation and internet technology becoming readily available for consumers and businesses.

Firstly, transaction costs have been massively reduced, since internet technology allows information to be exchanged virtually instantly at no cost. For instance, listing an apartment on Airbnb can be done at little cost, just as potential customers can easily browse the multitude of offerings at no substantial cost. Without internet technology, it would have been prohibitively expensive to advertise an apartment offered for short-term rent or lease to potential customers across the globe, and it would in most cases have been impractical for potential customers to search for individual apartments temporarily offered for rent to serve their needs for a short holiday. The Airbnb business model is thus simply not viable on a large scale without cheap information-exchange through the internet. People have always offered rooms or flats for rent, of course, but the market for short-term rentals was largely non-existent before the internet age.

Secondly, the intermediation of a neutral third-party platform helps to mitigate the risks and uncertainty concerning economic transactions with strangers; the platform builds the requisite trust for sharing economy services to function. Airbnb, for instance, acts as an intermediary and ensures that the money is not paid out to the landlord before the temporary tenant has had the chance to ascertain that the accommodation lives up to expectations. Moreover, it offers a guarantee to landlords in case the flat is somehow degraded while in the custody of the guests. Perhaps more importantly, intermediaries operate user-rating systems to help users avoid counterparties with a dubious track record. It is hard to see how, for example, people could be convinced to hand over their keys to complete strangers without an intermediary stepping in to provide this kind of framework to build up trust and weed out people with a history of misconduct.

The sharing economy as we know it is thus intimately interwoven with digitalisation. The qualitative change wrought by internet technology in this respect has translated into both qualitative and quantitative change: the amount of commercial peer-to-peer lending has increased from a trivial to a substantial size, and as the proliferation of sharing economy platforms testifies to, new sharing concepts continue to be developed by entrepreneurs eager to launch the next Airbnb or Uber.

In economic terms, there is an expectation that the development of the sharing economy may come to benefit society at large. The promise that the sharing economy holds is at least fivefold:

1. Sharing services may increase consumer utility by offering new kinds of services that were not previously available. For instance, Airbnb allows people to stay in more "authentic" accommodation than traditional hostels, some people prefer flats to a hotel room (so that one can cook, so that the whole family can live together, etc.), and whereas hotels have tended to cluster in certain areas, peer-to-peer accommodation offers a greater variety in terms of location. For instance, most New York City hotels are situated in midtown Manhattan, whereas Airbnb listings offer much greater flexibility in terms of which locations are available.

2. Sharing services may also allow for more effective resource allocation and utilisation. In the jargon of the sharing economy literature, "one does not want a drilling machine, but a hole in the wall", and "one does not want a car per se but transportation", so it is arguably wasteful for all households to own drills and cars that see very little use. Following this logic, it would be more economical for fewer people to buy cars and drills and instead simply rent the asset when the need arises. The resources saved from producing fewer cars and drills could instead be invested in creating other goods or services to increase consumer welfare (or analogously, people save money if they can rent instead of buying, which enables them to spend more on other goods or services). In economic terms, the sharing economy increases utility by shifting the budget constraints of individual consumers outwards. Likewise, the owners of cars and drills can choose to make extra money by renting out their assets, which increases their utility. Conversely, while the sharing economy is often expected to result in a "greening" of the economy, this is by no means an inevitable outcome and will depend on how the money that consumers save by shifting from owning to renting assets is ultimately spent.

3. It has been argued that sharing economy services have positive societal externality effects by increasing social cohesion and third-person trust, which the social capital literature finds to be positively correlated with various indicators of well-being as well as economic growth. This effect arises because peer-to-peer commercial transactions lead people to interact with others, in many cases even with people from "outgroups".

4. Sharing economy platforms may increase productivity and economic efficiency by allowing for a more effective allocation of labour and capital/assets. For example, research based on a comprehensive study of data from the US has found that driver redundancies are much lower among Uber drivers than among regular taxi drivers. This is due to Uber's use of price surging, which means that drivers are happy to adjust their working hours to meet demand. During peak hours, prices surge, leading more drivers to offer their services on Uber; conversely, supply declines as demand dwindles. Anybody who has tried in vain to get a taxi on a late Saturday night can appreciate why this increases consumer welfare. Moreover, according to this research, even though Uber operates with lower per hour prices than traditional taxi companies, the per hour remuneration in the US is in fact comparable.

5. In some cases, there is nothing to prevent or prohibit traditional businesses from using the same techniques as sharing economy platforms. For example, apart from some statutory maximum prices in some countries, taxi companies could also adjust prices to demand, along the lines of Uber's price surging, and they could use apps to ease access to taxi rides. However, sharing economy services have been the harbingers of innovation and new business models. As such, the sharing economy services are a strong force of "Schumpeterian" or innovation-driven growth that help unlock economic potentials and give agents more freedom over their consumer choices.

Reaping the productivity dividend

The rise of the sharing economy has led to widespread "disruption" in many industries as new business concepts challenge and often surpass traditional ones. Uber and Airbnb are often seen as the exemplars of the transformative power of digitalisation, and as many other industries are poised to be "disrupted" by new digital business models, many analysts believe that the modern economy is set to usher in a new era of productivity growth.

But as analysts have frustratingly found, the empirics fail to conform with these expectations, as productivity growth - at least in the Western world - continues to stall. To paraphrase Robert Solow, we see platform economy services and new digital business models everywhere - except in productivity statistics. For regulators, one pertinent question therefore is whether something is blocking the digital economy and if by some regulatory action the long-expected productivity boom can be brought about.

At least three explanations can be given for this so-called productivity paradox.

One possibility is of course that this expectation is simply wrong. While few would argue that digitalisation has not brought any productivity gains, perhaps they have largely been exhausted already. And perhaps we tend to exaggerate the gains to be accrued from digital technologies. After all, as more and more office software for information-sharing has become available, employee time has been pushed towards marginal activities whose benefits for the company are small. For instance, setting up meetings with many participants used to be rather tedious but is now easy, thanks to commonly used software such as Microsoft Outlook; consequently, the threshold value a meeting must have before it is worthwhile to set it up has decreased. In the same vein, many employees complain about the large number of emails they receive with little valuable information. At a company level, digitalisation has spurred the growth of a number of new back office support functions, such as increasingly expensive ICT divisions, social media and communications experts, and many similar services. In short, based on the current productivity growth trajectory at least, it seems unwarranted to liken the current phase of digitalisation with another industrial revolution.

Second, it is feasible that our current state of technological and digital development is simply not yet mature enough for it to translate into productivity gains that are felt at a macroeconomic level. For instance, as noted above, the US experience is that Uber provides greater productivity in the field of personal transportation but is too limited in scale to significantly affect the productivity level as measured across the entire economy. Of course, if the claims that digitalisation will (eventually) greatly enhance productivity levels are correct, we would expect such effects to accumulate over time as more and more industries experience disruptions and the process of digital innovation and transformation proceeds.

Third, there are well-known measurement problems that could lead us to insufficiently capture the true productivity effects of digitalisation. Qualitative changes are hard to adequately capture; price indices are developed by looking at the price of a basket of goods over time, but what if product quality increases so that they should also be worth more to the consumer? For example, the price of a personal computer has plummeted but its computing power has increased exponentially, so the true consumer value is not adequately captured simply by seeing how much cheaper a personal computer has become. In short, it could be that productivity is actually growing fast, but we have failed to pick it up statistically.

Although sharing economy services constitute only a relatively minor subset of the total digital economy, examining sharing economy services may yield a part of the solution to the productivity paradox. More pertinently, from an economic point of view, if new digital business models and services indeed hold the potential to greatly increase productivity, we must ask what can be done by regulators and other actors to unlock it. This is a question that national governments and the European Commission are increasingly devoting attention to. Perhaps most forcefully, the Commission has made it a central policy objective to ensure a truly integrated Digital Single Market through regulatory harmonisation, since regulatory divergence and market fragmentation in digital fields are seen as major impediments to growth and business development in the EU.

Divergence and harmonisation in the sharing economy

Differences in the use of and the rules governing sharing economy services may well result in different approaches by national regulators. The British government, for instance, has been very forthcoming and declared its intent to make the UK the "global centre for the sharing economy". Other governments have been less sanguine, especially in light of the resentment many labour unions and other political actors harbour against certain sharing economy services and, more generally, the presumed development of a "gig economy" of low-paid employees who will be unable to find the economic certainty and stability that full-time permanent employment provides.

Differences also arise at the level of the judiciary, as legal traditions differ among member states, which may cause the slowly developing jurisprudence concerning sharing economy platforms to develop in different directions across the EU. In the most visible example of this, Uber has been banned in a number of countries but continues to operate in others. Labour markets and labour law in particular differ vastly across EU member states, from the flexible Anglo-Saxon and Eastern European models to Scandinavian "flexicurity", in which the state has little sway over labour market issues, to the continental and Southern European labour markets, where the state plays a pivotal role. As a result, regulatory and legal differences are bound to arise and perhaps increase over time as initial path-dependencies are established and affect the subsequent development of sharing economy regulation, as well as the actual development of sharing economy business models and concepts. Additionally, while there have been significant movements in the direction of greater European integration within labour legislation, e.g. with the service directive and more recently the working time directive, regulating the sharing economy is a comprehensive topic that impinges on many regulatory and legal aspects and touches questions more deeply engrained in the fundamental functioning of labour markets.

Interestingly, while there is considerable divergence in the extent to which sharing services are utilised across EU member states, these differences do not seem to mirror the general "digital divide" between more and less tech-savvy consumers and countries (see Figure 1). For instance, a Eurobarometer survey has shown the French and the Irish to be the most frequent users of sharing economy services, whereas Malta, Cyprus, Czech Republic, Finland and Portugal are least prone to do so. This variability suggests that the European economy may well be set on a path towards a confusing "patchwork" in terms of both regulation and usage across member states.

Utilisation of sharing economy services in the EU, by country

in %

Note: Percentage of each country's population indicating they have used such services, in response to the question "A collaborative platform is an internet based tool that enables transactions between people providing and using a service. They can be used for a wide range of services, from renting accommodation and car sharing to small household jobs. Which of the following matches your experience regarding this type of platform?"

Source: Eurobarometer 438: The use of collaborative platforms, March 2016, European Commission.

On the one hand, regulating the sharing economy in many ways seems like an obvious area where European-level integration will confer benefits. In the absence of common rules, sharing economy companies may find that different rules, regulations and interpretations apply to their business concept across member states. For example, one crucial question is whether a sharing economy operator (e.g. an Uber driver or an Airbnb host) should be considered an employee of the platform, a subcontractor of the platform or an independent contractor - and in turn, if deemed to be a contractor, whether the service provider would be seen as an independent business in his or her own right or simply a natural person. There is little reason to expect judges and regulators to come to the same conclusions across all EU member states concerning such matters. This divergence will make it harder for sharing services to grow and operate across borders and will generally hamper the development of the European sharing economy to the detriment of consumers and business.

On the other hand, the sharing economy touches upon a number of areas that are national competencies and in which member states and populations in some cases are reluctant to see legislation move to Brussels. As noted above, labour market laws and regulations are strongly rooted in national traditions and jurisprudence, which makes harmonisation with regard to sharing economy services difficult without more fundamentally harmonising labour market models. Regulating the sharing economy is therefore no easy task, and this is further compounded by the nature of the digital transformation that it is precipitated on.

Hitting a moving target

Regulating the sharing economy is a particularly daunting task because it is still evolving fast. Accommodation and personal transportation are arguably the only areas in which sharing economy services have gained significant traction, but the expectation is that many other areas will develop in the future. Regulators will benefit from a factual understanding of the sharing economy and its implications. For instance, an oft-used example to describe the regulatory challenges of the sharing economy is that it is unnecessary for households to own a drill that they rarely use if they can instead borrow one for a small fee. But if a drill is repeatedly rented out through sharing platforms, it will quickly get worn out, and the stipulated product guarantees might no longer apply. This is an obvious area that requires regulatory clarification and perhaps updating, but in fact it is probably a rather minor problem relative to other challenges posed by the rise of various kinds of platform services.

While many observers of the sharing economy surmise that it will continue to grow and encompass new areas, it is very difficult to foresee in which areas it will stay a negligible niche concept and where it will gain traction. This means that regulation will invariably lag behind. Policymakers thus face the difficult dilemma of either being very specific, at the risk of impeding innovation and creating lock-in dependencies, or being less specific, at the risk of not properly addressing the issues in question and failing to provide enough clarity for the sharing economy to develop on an even regulatory playing field. Regulating the sharing economy is thus akin to hitting a moving target: it is a difficult task since one does not know how the future movement trajectory and pace will develop.

Regardless, the sharing economy has reached a size where regulatory action is called for. According to Eurobarometer data, 17% of all EU adults have used a sharing economy platform at some point (see Table 1). Sharing economy services are employed more frequently by the young, who tend to be digital first-movers. Another study of sharing economy users in one EU member state found that age and degree of urbanisation are the two strongest predictors of whether a household has used a sharing economy service or not, and that people with university degrees are more likely to have used such services than those with only primary school education.

Utilisation of sharing economy services in the EU, by demographic group

in %

Note: Percentage of each demographic group indicating they have used such services, in response to the question "Which of the following matches your experience regarding this type of platform?"

Source: Eurobarometer 438: The use of collaborative platforms, March 2016, European Commission.

Those sociodemographic groups that use sharing economy services less may well catch up fast. In one study, 77% of sharing economy non-users indicated that the reason they have not used sharing platforms was that they simply had not really thought about it. In short, there seems to be considerable potential for further growth in the sharing economy, which accentuates the need to ensure an adequate regulatory framework for sharing economy platforms.

Regulatory challenges and the risk of "patchwork Europe"

The rise of the sharing economy has garnered regulatory attention at both the national and European levels. There are several major issues of contention which regulators particularly need to address.

Employees or contractors

As mentioned above, one important question to resolve is whether sharing economy service providers (i.e. the Uber driver, the Airbnb landlord, etc.) are to be considered employees of the sharing platform or independent contractors. This is a crucial question, because employees have certain rights with regards to working conditions, paid leave under various circumstances, etc. Furthermore, they are entitled to remuneration for expenses, whereas independent contractors are not. For example, Uber drivers in the US have founded a union of sorts to centralise price bargaining with Uber, but if they are considered independent contractors rather than employees this would probably amount to an illegal cartel trying to coordinate prices between several business ventures. Several lawsuits concerning the status of Uber drivers have already been pursued in the US, but the legal differences are too large for American jurisprudence to yield any definitive answers for a European context.

Business entities or private individuals

If sharing economy providers are to be considered as independent contractors, we must in turn ask whether and under what conditions they should be considered business entities rather than simply private individuals. How this question is answered will have important regulatory repercussions, as businesses are regulated and must meet numerous administrative and regulatory requirements. For example, legislation concerning consumer rights and consumer protection generally foresees a relationship between individuals and businesses, but it may not apply to relationships between two individuals.

On the one hand, it may seem excessive to expect a casual sharing economy service provider to understand and ensure compliance with a vast body of regulation, and it could well stifle the sharing economy if service providers are equated with businesses in all regards. On the other hand, if sharing economy providers are not considered businesses, and various industry and business regulations do not apply to them, then they might be construed as having an unfair advantage by dodging the rules that non-sharing operators must follow. Obviously, the expansion of sharing economy services will only benefit society if they truly represent something that is more efficient and yields higher customer utility - and not if their growth simply reflects that they are not held to the same requirements and standards as other businesses due to the regulatory ambiguity under which they operate.

The prevailing interpretation, and the one propagated by platforms fearing the consequences if they were to incur a vast mesh of legal responsibilities, may be that platforms are intermediaries only. It is well established, however, that platforms can be held liable for what they are used for under certain circumstances, so depending on the specifics, sharing economy platforms could conceivably face certain obligations that must be assessed on a case-by-case basis.

Contractual relationship

Another range of questions arise concerning the nature of the contractual relationship entered into when somebody uses a sharing economy platform, and the liabilities and obligations that stem from the nature of the relationship for both the platform and the service provider. While some platforms are passive, others take a more active role. For example, most sharing platforms actively manage a trust-building user review scheme: Uber offers comprehensive guidance to drivers concerning the legal side of ride-sharing, while Airbnb intermediates in a way so that the rent is only paid out to the host once the guest has ascertained that the accommodation lives up to the agreed stipulations. Both platforms offer "guarantees" to users in case of accidents or other mishaps. This suggests that sharing economy platforms may in reality face more comprehensive liabilities and obligations.

While it is probably excessive to consider a sharing economy platform a contracting party and the actual service provider a subcontractor, this does not absolve the platform of any responsibility. For example, if a personal transportation platform failed to weed out a service provider with a criminal record, despite having set up procedures to do so, and the person committed a felony against a customer, it is reasonable that the platform might incur some legal responsibility. This follows existing jurisprudence on platform liabilities, but since sharing economy platforms are clearly different from other platforms (such as eBay) that previous rulings have covered, it is likely that their more extensive role implies more comprehensive responsibilities and liabilities.

Insurance

A further issue raised by the advent of the sharing economy relates to the matter of insurance. As described above, the sharing economy works only insofar as some degree of trust can be established between strangers. In order to generate the requisite trust, some sharing platforms have begun to guarantee their users against mishaps. If the innocuous-looking tenant decides to thrash your apartment, Airbnb now guarantees to pay for damages up to a certain amount. It bears noting, however, that in case of disagreement between the platform and a service provider invoking the guarantee to demand compensation, this service would hardly amount to actual insurance, with the implied legal obligations on the part of the insuring company and with certain insurance industry standards to be observed and the possibility of calling upon neutral arbitration, etc.

Taxation

Another major political issue with regards to sharing platforms is that of taxation. Income from sharing services should be declared and taxed, but one may well speculate that income accrued from sharing economy platforms in reality largely escapes the attention of tax authorities, as service providers choose not to report it. Tax avoidance is of course an endemic problem, but as the sharing economy rapidly expands, the magnitude of the problem is fast becoming non-trivial. Authorities will have to find ways to ensure proper oversight with these income streams.

Externalities

On top of these difficulties and the legal uncertainties resulting from the sharing economy, there are also concerns regarding negative externalities. For instance, home-sharing leads to a regular flow of new people moving into a neighbourhood or apartment block, which can create a sense of estrangement and make permanent residents uneasy. In most cases, the new temporary tenants are tourists on holiday and tend to be noisier than permanent residents. City councils in some cities have decided to step in and restrict the use of home-sharing platforms. Other similar negative effects may conceivably arise from other types of sharing economy services, which could necessitate regulatory attention to resolve.

Concluding remarks

Regulatory bifurcation would obfuscate and hamstring the development of a European sharing economy. The Commission is now beginning to tackle the integration of audiovisual markets and e-commerce in the EU under the aegis of its digital economy initiatives. Much can certainly be done to regulate platform services. It has long been a concern of European policymakers that the EU appears to be lagging behind the US when it comes to digitalisation. It is often noted in Brussels that the EU has failed to produce a truly global IT company (although SAP and perhaps BlaBlaCar could arguably be seen as exceptions to this claim). Meanwhile, the US can boast of Facebook, Apple, Google and, indeed, Uber, Airbnb and a dozen other companies shaping the new digital economy. Moreover, while European countries do generate many major tech start-ups such as Skype, they tend to be acquired by large American corporations before they can grow to global dominance. It is therefore a concern that Europe will once again prove less adept at reaping the gains of digitalisation with regard to the development of a sharing economy, especially as a patchwork of different national regulations and legislation may hinder the development of pan-European sharing economy services.

For national and European regulators, then, there is much to be done, and the stakes are considerable. Regulation must strike the difficult balance between being too loose and vague, in which case it would not bring about the much-needed clarity and the even regulatory playing field, and being too stifling and heavy-handed, in which case it would thwart the development of the European sharing economy. Failure would prevent the EU from fully reaping the economic rewards that the sharing economy offers.

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Regulating the European Sharing Economy: State of Play and Challenges

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The past years have seen an extraordinary proliferation of sharing economy platforms, and the largest platforms have fast become global enterprises with market capitalisations that exceed competitors with "traditional" business concepts. These developments call into question a number of regulatory matters and pose new questions for national and European-level regulators.

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Hall, S., & Pennington, J. (2016, August 28). How much is the sharing economy worth to GDP? Retrieved December 12, 2017, from https://www.weforum.org/agenda/2016/10/what-s-the-sharing-economy-doing-to-gdp-numbers/

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How much is the sharing economy worth to GDP?

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There is a lot of value generated by the sharing economy that is not being fully captured in GDP numbers.

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current and future

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interview with airbnb founder - from $25k debt to $30 billion company - brian chesky

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Interview With AirBnB Founder - from $25K debt to $30 Billion Company - Brian Chesky, CEO talks

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This is the remarkable behind-the-scenes story of the creation and growth of Airbnb, the online lodging platform that has become, in under a decade, the largest provider of accommodations in the world.

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Sparks & Honey strategists. (2016, January 1). What's the future of sharing economy? Retrieved December 12, 2017, from http://bigthink.com/amped/whats-the-future-of-the-sharing-economy

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The Sharing Economy is a topic that has been garnering a lot of attention lately -- from startups embracing the collaborative model to consumers embracing the age old "sharing is caring" philosophy when it comes to vacation rentals, like AirBnB, or transportation solutions like NYC's Citibike or Zipcar. We at sparks & honey have seen real value in the sharing economy trend as of late and recently partnered with global digital agency, Tribal Worldwide, to host the Collaborative Economy Summit, in which we set out to gather thought leaders in this space an answer one simple question -- where is the Collaborative Economy heading and what value will it bring to business, brands and customers of the future?

Turns out we learned a few more interesting things along the way. Here are three key takeaways that emerged from the Summit:

Sharing isn't new: Sharing is human nature and has been around since the beginning of time. So, what is new about the sharing, or collaborative, economy and why is this an important exponential shift? Today, we have sophisticated platforms that allow for instant sharing, like super-fast mobile devices that allow for sharing from any location and online payment systems that allow for quick, online transactions. The combination of these factors allow for sharing at scale and across boundaries. A global, scalable sharing platform is allowing for the emergence of an unexplored economy. It has been driven by tech startups in its infancy, but is ultimately moving from an emerging model to one that is adopted by the masses. The Collaborative Economy is currently where social media was 10 years ago and this new economic model will no doubt continue to build momentum and disrupt most industries in the years to come, just as social did.

The Open Brand API: Most brands today are built like walled gardens and have not yet embraced the Collaborative Economy. In fact, many brands are outright dismissive and suggest this is just a way for millennials to make some extra cash during the recession. Many critics have suggested that Airbnb, Zipcar, Flightcar and Uber are passing trends. However, when you see companies like Wikispeed that has utilized the power of the Collaborative Economy to tackle automotive manufacturing, it becomes clear that brands need a road map for entering and navigating the Collaborative Economy successfully. For most industries, there is a new collaborative model waiting to be discovered. Brands have two choices: they can disrupt, or be disrupted. Brands will need to open up and begin to consolidate less behind walled gardens and embrace an open, collaborative model. This model will allow for Collaborative Economy contributors and participants to help shape and build brands while also participating in the upside of the company. The fast and fluid oscillation between areas of concentration and fragmentation are at the core of the brands of the future.

Haves vs. Have-nots: As the Collaborative Economy expands, the digital divide or gap between the "haves" and "have nots" will increase. The Collaborative Economy will give rise to a new type of knowledge worker that will define the future of work and the global economy. Over time, we will see a gap created between the individuals that are actively participating in the Collaborative Economy and the ones that aren't. The base level of entry into the Collaborative Economy is online access via a mobile device. As participants become more active and sophisticated in the Collaborative Economy, the gap will widen between them and the non-participants. Garnering access to the Collaborative Economy will likely become one of the greatest global social issues of the next 20 years.

Last week's summit that aimed to discuss the early learnings and future visions of the Collaborative Economy generated much commentary and debate and the overarching takeaway was that there is an explosion of energy around the Collaborative Economy that we expect to only increase. We can't predict exactly what will happen when the collaborative economy moves from the fringe to the mainstream, one thing we are certain of is that there are many industries ripe for disruption; those that recognize it early will ride the wave and those that don't pay attention will lose out on a new, lucrative way of doing business.
sparks & honey is a next generation agency that helps brands synchronize with culture. Follow us on Twitter at @sparksandhoney to stay up to date on the latest high energy trends.

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What's the Future of the Sharing Economy?

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The Sharing Economy is a topic that has been garnering a lot of attention lately -- from startups embracing the collaborative model to consumers embracing the age old "sharing is caring" philosophy when it comes to vacation rentals, like AirBnB, or transportation solutions like NYC's Citibike or Zipcar.