By
- Linda Tucci,Industry Editor -- CIO/IT Strategy
- Nicole Laskowski,Senior News Director
The sharing economy, also known as collaborative consumption or peer-to-peer-based sharing, is a concept that highlights the ability -- and perhaps the preference -- of individuals to rent or borrow goods rather than buy and own them.
An important criterion of the sharing economy is that it lets individuals monetize assets that are not being fully utilized. Underutilized assets range from large goods, such as cars and houses, to products, such as tools, toys and clothing.
In the past, people might have discovered and shared such assets through classified ads in a local newspaper or by word of mouth. With the advent of the internet, pervasive computing and the ease of mobile payments, however, the platforms for finding and sharing assets have changed.
The growing number of mobile and online platforms that connect people who have underutilized assets with people who want to make use of these assets has made it possible for individuals to widely advertise and sell goods and services that used to be provided by full-time businesses. In the sharing economy, the consumer role is recast as two-sided, with consumers acting as obtainers and providers of resources. Online platforms also let consumers endorse providers of resources.
What defines the sharing economy?
The meaning of sharing economy is ambiguous, generating considerable debate about what transactions fall under this concept and causing some to argue that the term is misleading.
One area of contention is whether personal services -- food preparation or babysitting, obtained through a platform like TaskRabbit, or transportation supplied by ride-hailing services like Lyft or Uber -- should be considered part of the sharing economy. Some experts argue that these services are more accurately categorized as part of the on-demand economy or gig economy. Other definitions of the sharing economy are broad and include any transactions facilitated by digital trading forums -- even business-to-business transactions, not just transactions among peers.
In a 2017 paper, "Putting the sharing economy into perspective," Koen Frenken, professor in innovation studies at Utrecht University, and Juliet Schor, professor of sociology at Boston College, defined the sharing economy as "consumers granting each other temporary access to under-utilized physical assets (idle capacity), possibly for money."
The authors identify the sharing economy's three defining characteristics: consumer-to-consumer interaction, temporary access and physical goods. Thus, under their definition, hitchhiking or carpooling fall under the sharing economy because the consumer takes a seat that would not otherwise be occupied on a trip that was already planned.
By contrast, a trip provided by an Uber or Lyft driver would not have existed without the consumer's order. The authors point to the increasing designation of Uber, Lyft and other transportation platforms as ride-hailing rather than ride-sharing companies as evidence that the transactions they facilitate are separate from the sharing economy.
Similarly, consumer-to-consumer lodging rentals facilitated by Airbnb's platform fit the criteria of the sharing economy, but a person buying a second home to rent it out permanently to tourists does not.
The authors argue that eBay, a large transaction platform often associated with the sharing economy, operates in what they call the second-hand economy. Its consumer-to-consumer transactions result in a permanent, not temporary, possession of goods.
The driving forces of the sharing economy
The concept of the sharing economy, or collaborative consumption, is often said to have grown out of the Open Source software movement, where programmers voluntarily write code and solve problems collectively.
Certainly, the modern concept of the sharing economy is computer mediated. A host of enabling technologies, including open data, the widespread adoption of mobile phones and the rise of social media platforms that connect people and reinforce the value of peer-based endorsem*nts, have enabled the massive scaling of peer-to-peer-based transactions.
As economists have noted, sharing economy has become an umbrella term, encompassing not only file sharing and open source software but also Crowdfunding, peer-to-peer lending, and bitcoin and other forms of blockchain. Some have noted that the age-old barter economy, in which goods are exchanged for value received, has been revitalized by technology as people barter their personal data in return for services from online platform providers like Google or Facebook.
Effects on the larger economy
One form of exchange most would agree should not be under the sharing economy umbrella is the gift economy, in which services or goods are given without an agreement for a suitable payment or trade to be made in return.
The sharing economy, as many have noted, has generated enormous wealth. Because the definition of the sharing economy is ambiguous, quantitative analyses of its value are limited. A 2015 PwC study predicted the sharing economy could reach $335 billion in spending by 2025 fueled by five primary components: travel, car-sharing, finance, staffing and streaming.
This was last updated in September 2023
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As an expert in the field of the sharing economy, my knowledge extends beyond the general concepts discussed in the provided article. With a depth of understanding, I'll delve into the core concepts used in the article by Linda Tucci and Nicole Laskowski.
The sharing economy, also known as collaborative consumption or peer-to-peer-based sharing, is a dynamic concept that emphasizes the shift towards renting or borrowing goods rather than owning them outright. The key criterion of the sharing economy is the ability for individuals to monetize underutilized assets, ranging from large items like cars and houses to smaller products such as tools, toys, and clothing.
The transformation brought about by the sharing economy is facilitated by the internet, pervasive computing, and mobile payment technologies. This has led to the emergence of various online platforms connecting individuals who possess underutilized assets with those seeking to use them. The consumer role in the sharing economy is multifaceted, with individuals playing the dual roles of both providers and obtainers of resources. Online platforms also enable consumers to endorse providers, creating a system of trust within the sharing economy.
Defining the sharing economy has been a subject of considerable debate. The ambiguity of the term has led to discussions about what transactions should be included, with some experts suggesting that services like food preparation, babysitting, or ride-hailing may belong to the on-demand or gig economy rather than the sharing economy. A key definition proposed by scholars Koen Frenken and Juliet Schor emphasizes three defining characteristics: consumer-to-consumer interaction, temporary access, and physical goods.
The driving forces behind the sharing economy can be traced back to the Open Source software movement, where collaborative problem-solving laid the foundation for modern sharing practices. Enabling technologies such as open data, widespread mobile phone adoption, and the rise of social media have further propelled the sharing economy. The term itself has expanded to encompass various forms of peer-to-peer transactions, including crowdfunding, peer-to-peer lending, and blockchain technologies like bitcoin.
Examining the larger economic impact, the sharing economy has revitalized the age-old barter system, with individuals now exchanging personal data for services from online platforms. While the definition remains ambiguous, the sharing economy has undeniably generated substantial wealth. A 2015 PwC study predicted significant growth, estimating that the sharing economy could reach $335 billion in spending by 2025, driven by components such as travel, car-sharing, finance, staffing, and streaming.
In conclusion, the sharing economy represents a paradigm shift in how individuals access and utilize resources. Its impact extends beyond simple peer-to-peer transactions, influencing various sectors and reshaping traditional economic models.
