The global market has continued to witness tremendous changes over the recent years due to the internet impacts. This has consequently led to advancement of digital platforms which are characterized with double-sided markets that helps to bring together the dynamic users (Kenney & Zysman, 2015, p. 235). Digital daises are generally classified under the umbrella of sharing economy; which is amalgam market based on uncluttered software of organized community to facilitate person-to-person and peer-to-business exchange of goods and services. Sharing economy today has become one of the most important section of the global economy (Harvey, et al., 2017, p. 367). It is a socio-economic network established by people and organizations to share the limited resources and to optimize the unused resources.
Sharing economy basically is a term used to denote economic activities involving online transactions. Different scholars have used the term interchangeably to infer to: collective consumption, gig economy, sharing platform economy and access economy. There is confusion and rhetorical controversy among the stakeholders that have equally developed around sharing the economy concept (Helmond, 2015, p. 1245). Academic scholars have been debating on the subject of sharing economy, different criteria have employed to include some platforms and also to exclude others. The commercial implementations comprises of a variety of structures, including co-operative and for-profit structures.
This essay focuses on unpacking the sharing economy phenomena, by diagnosing the economic, technological, social and political dynamics that have primarily contributed to the development of the sharing economy (Heinrichs, 2013, p. 228). Address the confusion and unforeseen challenges experienced by the range of users including: consumers, policy makers and obligatory businesses. The essay is going to employ a widespread evidence base and interdisciplinary approach to explore the passions and the interests in the sharing economy.
Seven decades ago, Joseph Schumpeter, a great economic scholar foretold of the competition that will arise among new commodity, new technology and the new source of supply. Today this revelation has come to pass, as described by the Codagone, Biagi and Abadie. The sharing economy has shifted to a more commercial side. This discourse results from social utopianism due to the open source community. The term has increasingly been used since about 2010, however a survey conducted by Pew in 2015, a renowned researcher indicates that the term is not widespread among Americans (Schor, 2016, p. 435). Researchers have projected the growth of this phenomena of our discussion from 14 billion dollars in the year 2014 to 335 billion dollars by the year 2025. This tremendous growth is anchored on the rapid growth of the Airbnb and Uber as the indicators of global expansion of the sharing economy (Heinrichs, 2013, pp. 228-231).
The Survey conducted by Forbes in 2013, reveals that the estimated revenue flowing into individuals wallets from the sharing economy is about 3.5 billion dollars. In the following year 2014, PWC calculated that on a global basis the value had grown up to 15billion dollars (Kim, et al., 2015, p. 76). For the United Kingdom only, the report shows the value of sharing economy to be around 500 million Euro Pounds and the figure was bound to grow much higher. However most of these projections should be taken with a lot of caution as they are inexorably based on questionable assumptions lacking reliable data.
Sectors like health care, transport and food industry are increasingly adopting and joining the sharing economy. Demand technology aggregators like Ola and Uber are the most common examples in the transport industry. The technology connects the consumers and the service providers. The customers connects with the drivers who take them to their destinations at the set prices (Hamari, et al., 2016, pp. 2047-2059). Other aspects of the transportation sector like the car ownership and car rentals have changed due to the emergence of carpooling platforms. Hospitality sector also in not left behind in regards as far as sharing economy is concerned. Airbnb, OYO and stayzilla have been providing travelers with an opportunity to rent space rooms and homes as opposed to the traditional hotels. These are some of the benefits originating from sharing the economy (Hirschman, 2015, p. 232).
The sharing economy have positively impacted on the consumers, entrepreneurs and the platform, providing the whole network with multiple benefits. It has boosted the innovative spirit which has led to optimal resource utilization, increased social mobility through creation of new jobs, increase skill development and the freedom to operate at individual’s convenience are just some of the benefit packages that comes with sharing economy (Cohen & Kietzmann, 2014, p. 278). More people are embracing the positive attitude to use digital platforms to access the market. Despite the positive effects, there are a number of obstacles and regulatory challenges that are associated with the sharing economy. Its rapid growth is accompanied by complex challenges that needs to be addressed.
Over the years, different scholars have not been able to formulate a sensible debate which can help to scatter the confusion around the sharing economy. This has been one of the prevailing obstacles to determining its economic value and aggregate population who participate as users or providers (Galston, 2014, p. 409). Due its complex nature, it is difficult to classify sharing economy into the standard classification used in business and economic statistics since its open to all the industries contribution (Hamari, et al., 2016, p. 243). As the sharing platforms continue to attract users due to the increased use of more efficient marketplace-type formats. Facilitated by the connecting powers and freedom of the smartphones the sharing economy are now indispensable venture for capital investment. However even the beats of the sector like Uber and Airbnb are affected by the regulatory vacuum, trust issue, security and risk extenuation issues and consistency in quality of services (Zervas, et al., 2017, p. 704).
Lack of definite laws and terms to guide the transactions between the peer-to-peer and peer-to-business have seen high number of economic sectors affected causing the sharing economy sphere of influence to be full of public controversies, legal disputes and intense protests. Terms used by the practitioners and the stakeholders are ambiguous and confusing making it difficult to conclude if actually they have been discussing the same issue (Baron & Padrutt, 2014, p. 232). This has been the major cause of the gap which limits the chances to hold judicious debate about the available alternative policy options which can help to resolve the conflicting interests among all sort of activities (Goel, et al., 2015, p. 275). The traditional industries have mainly been operating under the guidance of the law and regulations imposed to them by the relevant governing authorities in their respective countries but with emergence of the sharing economy business system there is urgent need to review and evaluate the laws around these industries. So as to address into particular the regulatory requirements of each sub-sector of the shared ecosystem.
The consumers need to feel protected by the laws even as they interact with the service providers through these sharing economy platforms. For example while regulations are traditionally available for the taxi operators, most nations lack the specific laws and regulations covering the on-demand transportation platforms (Whish & Bailey, 2017, p. 235). Only laws that limit the liability of the intermediaries have been enacted by some states, but still the general feeling across many platforms is that the governments and the policy makers should absolutely clarify the relevance of these laws to the various segments within the sharing economy (Malhotra & Van Alstyne, 2014, pp. 24-27).
Trust is a fundamental value, it acts as the ultimate prerequisite for the any nature of sharing. It is a challenging task to build trust with consumers through the online platform, as most of the online customers are more affordability and convenience oriented as opposed to establishment of loyalty with the service providers or developing social relationships with fellow consumers (Hsu, et al., 2015, pp. 153-169). Also lack of immediate response and accountability to customer complaints is a barrier in winning the consumers trust through the platform. For the sharing economy to continue existing and growing as projected by the previous researchers, companies will have to stand-in and come up with ways to gain trust from the consumers. The consumers need to trust the host whose home they are staying or the owner whose car they want to hire. The issue of trust is not limited to customers, the business need to keep up with acceptable standards of operation to win trust, but there is the fear that new business may come in with sub-standards and bring down the good reputation of the industry (Rauch & Schleiche, 2015, p. 21).
New industries are usually concerned with its ability continue to operate past its early-adopter stage and get into the mainstream of the industry. The sharing economy and market place industries need to reassure its customers that they are built to stay. The sharing economy is still very young and it highly susceptible to consumer changes (Thierer, et al., 2015, p. 830). The burden to maintain high quality services is increasing as the consumer’s tastes and preferences also vary from place to place. This is a serious facet of the sharing economy that if the companies and industries in the sector as whole will not pay close attention to then it surfers the risk of blowing up. It is not an easy task to maintain high-service rates and spread across all the multiple locations, but it needs to be done so as to keep in touch with the consumer’s unique expectations (Helmond, 2015, p. 432).
The security and risk mitigation subject must be tackled to help with understanding of the sharing economy. There various challenges that face the customers hence the urgent need to establish function risk mitigation mechanisms. The response to the customer complains must be prompt and with clear defined channels. This helps to improve quality of services provided. State of information asymmetry should be eliminated at all costs as it contributes to the consumer risks. Consumer protection improves the consumer’s welfare. Some of the existing methods used to reduce level of risk faced by consumers is by relying on the status ratings which help to expose the companies in the industry. This helps to contribute to the success of the platform and also provide data that can be used by future users or stoke holders. Today, the sharing economy is beginning to have business-to-business platforms. The transactions involved here usually involve big figures. The big question is what if a transaction goes wrong. Some measures like insurance should be put into place to help reduce such risks.
Throughout our discussion we have established that the sharing economy is a package with both the positive impacts and several challenges that have created misperception around this phenomena. The world is becoming more digitalized and the number of people and business to join the sharing economy is expected to grow higher. Today the number of people who use smartphones have tremendously increased across the world.
The policy makers need to adopt to this change and amend laws across the global that will encourage fair completion. Eliminate or prevent racial and price discrimination associated with sharing economy. This eventually will encourage completion, improved quality of goods and services at reduced prices. The huge data collected from the consumers should be protected to improve transparency in the various sharing platforms. The policy makers and the regulators are on the sport light as far as the future success of the sharing economy is concerned. They need to undertake new series of activities which will help to draw clear boundaries between the personal and business. Also they should be careful to prevent the erosion of the tax base of their respective countries.
Sharing economy has both economic, environmental and social impacts. It held its first conference in San Francisco in the spring of 2014. In attendance were the founders, funders, fans and punitive critics. They came up together to discuss the issues of circulation, admission and segregation in the sector. They also mentioned the strategies they have established to realize their vision of fair prices, low carbon release in the environment and transparency in the socially connected economy. Sharing economy have been using the socially- liberal feel good grandiloquence to create huge amount of wealth (Sundararajan, 2016, p. 264). Today the user base of the sharing economy are mainly the highly educated, the urbanites and the whites. We need to know if they will be able to fulfill their promises of providing decent livelihoods to the providers and quality goods to their customers and not create a state of monopoly. The sharing economy is still very young, first stage, and so it is difficult to develop definitive answers, but it is very important to ask analytical and empirical questions in a critical manner at this stage.
Sharing is an ancient practice, people used to rent or lend goods to their friends or family members even before the dawn of internet platforms. The new aspect with sharing economy is that users now lend goods to strangers. The internet has reduced transaction cost between strangers as information is readily available about supply, reliability and contract forms (Slee, 2017, p. 173). The information about sharing economy platforms on the past behavior is meaningful to the users for future transactions. Lack of broad social contacts is what l used to limit the sharing to a circle of trusted friends and relatives.
The sharing platforms have continued to be restrictive and discerning to allow the researchers access their user data for purposes of scientific assessments of its sustainability impacts. They have been citing competition and consumer privacy as the core reasons. This contributes to the aperture of information we possess, as it is not only theoretical but also empirical. Hence, it is worth noting the inverse reasoning involved in the social process of assessing the desirability of sharing platforms (Malhotra & Van Alstyne, 2014, p. 324). Restricted access to users’ data contributes to the existing confusion around the policy and regulations implementations and evaluation. We need to accept that the accurate influences sharing economy will continue to remain unclear for a long future time.
Conclusion
The speculation that sharing platforms may eventually grow into state of monopolies may be ill-founded. As it is evident that the cost suffered to effectively inaugurate a new platform market globally is less compared to that needed to launch a local market. Furthermore, the platforms are most likely to lose their value assets as the software of the platform becomes universal over time. This means there is a scope of alternative platforms that are likely to surface. This will help to eradicate monopoly in the sharing economy. Future researchers may conduct a study on how to systematically hypothesize and empirically evaluate numerous impacts of the current sharing economy platform with respect to individuals, globe and opulence? To what point can this evaluation be done without necessarily accessing the users’ data? To establish accurate and specific answer to this research question will not be easy. It is a challenging endeavor which require different disciplinary evaluation and a range of methodological approach.
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