Topic: While sharing economy has benefited consumers, there is an increased inequalities in the accommodation and transportation industries.
While sharing economy has benefited consumers, there is an increased inequalities in the accommodation and transportation industries. The sharing economy has excited individuals when it comes to transforming accommodation and transportation industries as it allowed more people to earn from these industries (Köbis et al., 2020). While there are positive impacts of sharing economy, as in the case of accommodation and transportation industries, there are negative aspects of it that could not be overlooked.
Challenging What is Traditional
Sharing economy is a transformation of traditional business model that would trigger adjustments in from a consumer standpoint and owner of a resource (Öberg, 2023). What this means is how there is a potential narrative when it comes to achieving value for consumers without spending as much. For example, rather than purchasing a car to take to one’s workplace, a person could book a ride using an Uber app (Aliari & Haghani, 2023). In this example, Uber shows that it could offer a service similar to a taxicab, but there is more luxury because it looks like a private car, which could be beneficial to consumers. Below shows a photo from Creative Commons (2023) that reflect the platform’s interface.
The transformation of the industry stems from how it also offers an opportunity for car and condo or house owners to tap their underutilised assets to amass more income (Öberg, 2023).
For example: A single individual living in Melbourne may be able to afford a two-bedroom condo and may choose to offer one bedroom with amenities like common kitchen as part of the Airbnb. The underutilised asset in the case of a house could still appreciate, but it could still gain more profitability if people would be able to have access to an asset without purchasing it. This means that there would be wealth accumulation for owners of accommodation and transportation if they choose to participate in the sharing economy (Hussain et al., 2023). What this means for accommodation and transportation owners is how they could compete with other established operators without having the need to have identical amenities.
In tying more choices for consumers and tapping underutilised assets for owners, a positive influence of sharing economy is how consumers are able to save because of having more choices than traditional accommodation or transportation (Akbar & Tracogna, 2018). When a consumer who will be travelling to California for work would compare prices of a hotel, then it would be a massive outlay given the level of development in the state. However, as more people opened their extra room or spare condo to renters, there was an introduction of another price point that would be meaningful to renters that do not want to splurge on a hotel (Akbar & Tracogna, 2018). Overall, there could be savings, but this would be a competition with traditional businesses operating in accommodation and transportation industries, which will be explored in the next paragraphs.
Heightening Inequalities and More Problems
The sharing economy companies like Airbnb and Uber were seen as industry disruptors, but it cannot be denied that they still excited consumers. Since the positive aspects of sharing economy is more choices for consumers and more wealth accumulation for those with underutilised assets, sharing economy has a drawback of fostering inequalities (Hussain et al., 2023). If there is a way for people to access assets they do not have to purchase like a room for a night or a car to go to a destination, then where does wealth inequalities come in.
One of the most valuable counterarguments of sharing economy is how it exacerbates inequality in between countries and cities as well as hosts. On the owner of the underutilised asset, for example, there is already inequalities among hosts of Airbnb and Uber drivers (Quattrone et al., 2022). For example, an Airbnb hosts or Uber rider with positive or higher reviews would have higher earning potential to those with lower ratings. However, the extent of inequalities goes deeper because of how the existence of sharing economy platforms have an impact on the long-term inequalities in territories. As an example, there are white American owners in black and Hispanic neighbourhoods in the US that would accumulate properties to rent out to Airbnb, which means that those who need the home would see higher market prices (Bosma, 2022). The resource allocation in this sense is altered negatively (Quattrone et al., 2022). In the same view, Uber drivers are catering the same market that already struggling taxi drivers are operating on. Since there are people who are able to access assets for short term, it thus hurts those who are living in certain cities because the demand for Airbnb and Uber skyrockets the cost of living.
The drawback of sharing economy’s profitability of asset owners and more choices for consumers is captured in Two Cents’ video. Even if Uber has not turned a profit for years leading to the pandemic, there is still a challenging view of sharing economy since others like Lyft posted negative income (Two Cents, 2021). Since there has been losses in the companies operating in the sharing economy, then why do they continue in the first place while expanding rapidly. The companies operating in the space may be seeing declines, but this does not mean that inequalities do not manifest since even Uber has not even helped in fixing traffic and other transportation issues (Two Cents, 2021). This means that there may be accumulation of profit for those renting their Airbnb accommodation and Uber cars would be earning a bit, this does not tickle down to the likes of Uber. After all, Airbnb has challenged the position of hotels regardless of if Airbnb’s increasingly growing in income or not (Zervas et al., 2017)
Meanwhile, there is also heightened inequalities because of the sharing economy since workers of Uber has been treated poorly just so there could be a bit of profitability from the standpoint of the organisation (Two Cents, 2021). The way that Airbnb and Uber could amass monopoly could be at the expense of the well-being of organisations in the process. There are reports of exploitation of Airbnb workers and Uber drivers (Gebrial, 2022). With the goal of catering to more customers, Uber delivery riders suffered from earning below minimum wage (Gebrial, 2022). In this sense, there could be further complication of sharing economy since the bargaining power of platforms like Airbnb and Uber, regardless of if they are making money or not, would be causing an impact to people. The inequality is not only within the industry but also the employees that make the platform work.
Second, the transformation of industries meant that Airbnb and Uber are not in the same cost continuum that traditional businesses are operating on, thereby causing unfair competition (Česnuitytė, 2022). This is because sharing economy’s regulation is still less developed than those operating traditionally, which means there could be cost differences. In this view, Airbnb and Uber are offering unfair competition as they chase consumers on the lookout for convenience and cost savings by engaging with the sharing economy.
In the process of achieving more understanding of sharing economy, it cannot be denied that there could be a way to achieve benefits while making it more equitable for all. For one, the use of stricter regulations would make it fairer to those operating in the hotel and resort industry that are operating at a higher cost. Second, there could be stricter entry for Uber drivers to ensure that there would be sustainable demand for drivers and that there could be a liveable earning potential based on the number. It cannot be eradicated but there could be improvements on how to see sharing economy today.
Akbar, Y. H., & Tracogna, A. (2018). The sharing economy and the future of the hotel industry: Transaction cost theory and platform economics. International Journal of Hospitality Management, 71, 91–101. https://doi.org/10.1016/j.ijhm.2017.12.004
Aliari, S., & Haghani, A. (2022). Alternative pickup locations in taxi-sharing: A feasibility study. Transportation Research Record: Journal of the Transportation Research Board, 2677(1), 1391–1403. https://doi.org/10.1177/03611981221104690
Bosma, J. R. (2022). Platformed Professionalization: Labor, assets, and earning a livelihood through airbnb. Environment and Planning A: Economy and Space, 54(4), 595–610. https://doi.org/10.1177/0308518×211063492
Creative Commons. (2023). Creative commons. CC Search Portal. https://search.creativecommons.org/
Česnuitytė, V. (2022). The sharing economy in Europe Developments, practices, and contradictions. Palgrave Macmillan.
Gebrial, D. (2022). Racial platform capitalism: Empire, migration and the making of uber in London. Environment and Planning A: Economy and Space. https://doi.org/10.1177/0308518×221115439
Hussain, H. I., Kamarudin, F., Anwar, N. A., Ali, M., Turner, J. J., & Somasundram, S. A. (2023). Does income inequality influence the role of a sharing economy in promoting sustainable economic growth? fresh evidence from emerging markets. Journal of Innovation & Knowledge, 8(2), 100348. https://doi.org/10.1016/j.jik.2023.100348
Köbis, N., Soraperra, I., & Shalvi, S. (2020). The consequences of participating in the sharing economy: A transparency-based sharing framework. Journal of Management, 47(1), 317–343. https://doi.org/10.1177/0149206320967740
Quattrone, G., Kusek, N., & Capra, L. (2022). A global-scale analysis of the Sharing Economy Model – an Airbnb case study. EPJ Data Science, 11(1). https://doi.org/10.1140/epjds/s13688-022-00349-3
Two Cents. (2021, October 6). Is the sharing economy a sham? YouTube. https://youtu.be/6RfDvO5gaXk?si=nlLspl57lJoHlB8J
Zervas, G., Proserpio, D., & Byers, J. W. (2017). The rise of the sharing economy: Estimating the impact of Airbnb on the hotel industry. Journal of Marketing Research, 54(5), 687–705. https://doi.org/10.1509/jmr.15.0204
Öberg, C. (2023). Towards a typology of sharing economy business model transformation. Technovation, 123, 102722. https://doi.org/10.1016/j.technovation.2023.102722