Sharing economy
The sharing economy, also known as collaborative consumption, is an economic model that enables individuals to borrow and rent assets owned by others, promoting the efficient use of resources. This system primarily revolves around temporarily utilizing physical items—such as cars and accommodations—that might otherwise go unused, which can help reduce waste and contribute positively to the environment. The concept gained traction during the financial crisis around 2010 and is heavily influenced by advancements in information technology and mobile communication, allowing easier peer-to-peer transactions.
Trust and transparency are fundamental to the sharing economy, as successful transactions often depend on the confidence participants have in one another. While the sharing economy has facilitated the rise of successful companies like Airbnb and Uber, which capitalize on underutilized assets, it has also faced criticism. Some argue it leads to precarious work conditions, replacing stable jobs with low-paid, part-time roles devoid of traditional labor protections. Critics also contend that the original ethos of collaboration has been overshadowed by a focus on profitability, blurring the lines between true sharing and capitalistic practices. Overall, the sharing economy presents both opportunities and challenges, reflecting diverse perspectives on resource management and employment.
Subject Terms
Sharing economy
A sharing economy is an economic model that allows people to borrow and rent assets that are owned by others. This system is designed around the sharing of resources, both physical and human. The most likely assets to be involved in a sharing economy are those that are not used to their full capacity at all times, such as cars.
"Collaborative consumption," another name for the sharing economy, is meant to benefit the environment as well as the individuals involved. People who rent out their possessions earn extra cash, the renters find a good deal, and fewer resources are squandered. Instead of buying a new item that they will rarely use, renters pay for a one-time use, preventing unnecessary waste.
While the core of the sharing economy is peer-to-peer renting of physical items, the term has expanded to include rental of temporary services, such as a one-time driver or cook.
Background
The computing sector was the first to use the term sharing economy. Coders developed an open-source community wherein they posted programs on the Internet for anyone to use, free-of-charge. Gradually, the concept evolved to apply to other fields as well, as people sought to use technology to more efficiently distribute scarce resources.
Collaboration, or sharing, gained popularity around 2010. With a financial crisis in full swing, people were eager to gain access to resources without overpaying. Rachel Botsman and Roo Rogers published an innovative book, "What’s Mine Is Yours: The Rise of Collaborative Consumption." The authors called the sharing economy a social revolution that allows the sharing of resources across multiple platforms, benefiting the entire community.
Both financial need and the rise of the information technology field have contributed to the rapid growth of the sharing economy. Mobile technology and the runaway popularity of social media have been driving forces in propelling the sharing economy forward. The ease of communicating and performing business deals across the globe have paved the way for person-to-person transactions.
Trust is the backbone of the sharing economy. Without trust, people would refuse to collaborate with remotely located strangers. The openness and transparency of the sharing economy boosts users’ trust, as people openly share information about their resources with others. The Internet, which gives access to reams of information about individuals, allows people to perform their own background-check style assessments of others.
The dominant areas of the sharing economy are goods, services, space, transportation, and money. Early adopters of the sharing economy have become wildly successful. Airbnb, an online marketplace for rental accommodations all over the world, earned tremendous publicity for the sharing economy when it raised $112 million in investments in 2011. By 2025, the company was worth $85.26 billion. Similarly, Uber, founded in 2009, which connects riders to drivers, was worth more than $147.37 billion by 2025.
Critics of the sharing economy contend that it harms the economy by replacing secure jobs with part-time, low-paid work. They also say that the sharing economy that has developed has departed from its collaborative roots.
Overview
The sharing economy is an ecosystem based on the borrowing and renting of assets from individuals. Also known as collaborative consumption, the concept rose to prominence as the economy slumped and information technology progressed. The new availability of information about people and things allowed physical assets to be broken down into their components and sold as services.
At the core of the sharing economy are several beliefs. One is trust, because a sharing transaction can succeed only if the participants are trustworthy. "Access over ownership" is another belief, meaning it is better to use something than to own it. A third is transparency and openness, which translate into the sharing of information in order to give access to resources. An additional belief is not allowing a resource to go unused. Sharing should allow resources to be used to their full capacity, reducing waste and helping the environment as it cements trust among its participants.
Criticism of the Sharing Economy
As it has developed, the sharing economy has garnered considerable criticism. Critics have complained that the term has become meaningless as the movement has strayed far from its roots. A disparate group of companies are lumped into the category, many of which actually have no relationship to sharing.
One commonly cited problem is Uber, considered one of the most well-known and profit-bearing examples of the sharing economy. While Uber does stay true to the ethos of the sharing economy by taking advantage of an unused asset (a car), it also uses the driver’s labor, which means the renter effectively rents both a car and a driver. Uber also faced scrutiny in large cities like New York for taking the jobs of taxi, or yellow cab, drivers. However, regulations were put in place to protect both New York cab drivers and Uber drivers as there is enough demand for both to function at once. Likewise, TaskRabbit, a company that offers temporary labor for hire, veers from the values of the sharing economy with its rental of people, not of unused assets, while also taking the jobs of small business owners who might perform similar tasks.
Opponents of the sharing economy say that it has become distorted. Instead of bringing more wage-earning opportunities to more people, it depends on part-time work provided by temporary employees. This concerns many in the financial world. For example, Robert Reich, former President Bill Clinton’s Secretary of Labor, sharply criticizes the sharing economy, saying that it puts workers at risk. He points out that temporary workers and the self-employed who typify the labor behind the sharing economy lack labor protections such as Social Security and unemployment benefits. Those workers are at serious risk of financial ruin if they become ill or if consumer consumption patterns shift.
Others maintain that the original concept of sharing economy quickly died out, to be replaced by peer-to-peer capitalism. While the original concept was nice, it was too impractical to gain speed. For example, SnapGoods, a promising start-up, which allowed neighbors to borrow items from one another, drew 30,000 visitors a month at its peak but eventually shut down because of lack of use. People were interested in the concept, but they failed to actually take advantage of it once the system was in play. As a result, the sharing economy companies that met with success made the process efficient and budget friendly, but bear little relation to the original premise of sharing.
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