Fair and Efficient Regulation of the Sharing Economy

While sharing is not new, the Sharing Economy is still quite a new phenomenon. It can be understood as the following economic process: online platforms reduce the scale for viable hiring transactions, or participation in consumer hiring markets, and thereby reduce the extent to which assets are underutilized

Users of the new online platforms are able to share labor, homes, cars, intellectual property and other assets. The upside for each side of the market is obvious: those who need an asset can enjoy greater availability and a lower quality-adjusted price; those who have an asset can enjoy a financial return on it that might otherwise go underutilized.

To the extent that market power accrues to Sharing Economy platforms, it is likely to be due to other barriers to entry. In particular, regulatory choices which limit the growth of the Sharing Economy might not deter existing platforms, but instead might deter potential new entrants, who would be competing for a share of a smaller market.

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