There has been an emerging, incredibly supple economic network that is referred to as the sharing economy and is a way to enable people to share their available resources in the structure of services, equipment, and even skills, between one another. It often comes at a lower cost in contrast to the traditional employment or local arrangements. From this arrangement, one can now even get a loan from one’s peers, get lodging from strangers, and even share an office space with other companies. Through this sharing of sources on demand, this sharing economy can increase efficiency. In some circumstances, the sharing economy additionally allows the participants to go through lifestyles without even owning their valuable items of equipment, such as cars, all the while creating undeniable opportunities from which others that have these resources can extract value from the idle assets and talents. This however would not be an easy task without the advancement of technology, since close to all forms of the collaborative consumption used are done over the internet where providers connect with the consumers of the services such as; renting a house with the help of online platforms such as Airbnb or even looking at places they can board their dogs. There are different types of sharing economies, and these will be discussed in the paper as a way of showing how they exist and how they operate to provide individuals with a service at significantly lower costs.
The first sharing economy to be discussed is the Peer-to-Peer lending economy. It is a platform that allows people to borrow and lend money even without using the traditional banking system. The basis for this arrangement is founded on the borrower’s history with their credit. The interest rate for this transaction is primarily set by the online platform being used and acts as the primary intermediary between both parties involved. It is an arrangement that has an element of added risk to the person lending out the money. Even though most of the peer-to-peer type of money lending is unsecured personal loans, they are offered through various platforms such as Prosper, Lending Club, and platforms like SoFi which offers student mortgages and loans while refinancing loans in the process. It is a platform that has been driven forward by the advancement of the internet technologies, and other innovations from different start-up companies that seek to increase the financial regulations away from traditional banking systems. It is a way of people who have money assets to find others who need money and lend it to them at interest. They are not firm like traditional banks since they are not worried of absorbing any losses when there are failed loans, and hence they are much leaner than banks.
Another sharing economy just like the Peer-to-Peer lending is the CouchSurfing which is a way of connecting homeowners to individuals that are in need of a place to stay for a short period as they travel. In this format, the hosts of the rental houses set the per night rates and also specify the available (Horton 2016). When prepping for a trip, visitors from foreign countries or even locals can browse through different types of accommodation located where they are traveling to and can choose the place that fits their needs and price ranges to ensure they are comfortable and safe. Some of the platforms that allow for accommodation sharing have been known to address the numerous risks in security when people share their living spaces with strangers and put up security protocols to aid the hosts. For example, one of the most common online accommodation platforms, Airbnb has a verified ID program that requires the visitors and the hosts to give their information about their background before they can be able to use the platform. VRBO, on the other hand, allows for the hosts to pick deposits from the potential renters and also draw up a mutual rental agreement to be followed by the tenants by setting up rules that they have to abide by when they are boarding the rental houses. There is, however, some due diligence that has to be taken into consideration by the owners of the properties when they are vetting the potential renters.
Another form of sharing economy is the Carsharing or Ridesharing, which offers benefits of owning a car, and also not having to depend on the public means of transport. It only has a few drawbacks and requires the individuals to pay for insurance, gas, and vehicle maintenance. With available platforms such lyft and uber, one can be able to hail a car through the help of drivers using their personal vehicles. And with a platform like Zipcar and Car2Go, one can commandeer a vehicle shared among peers or other individuals that are owned by profit or non-profit organization. It allows you to pay for the period that one uses the car.
The recent years have seen a race of new inventions and ideas combined with the internet to create available platforms that have created an adamant global network. It has established an avenue for change in the way that people conduct their businesses. Through these, the rise of the sharing economies has been generated to create connections and also create an income for the parties involved.
Gaidarenko, V. A. “The economy of collaborative consumption (sharing economy) : textbook for postgraduates and master.” (2016): n. pag. Web. 8 May 2017.
Horton, John, and Richard Zeckhauser. “Owning, Using and Renting: Some Simple Economics of the “Sharing Economy”.” (2016): n. pag. Web.