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Creating businesses from home and using what we have (usually material goods) has become fashionable. In fact, televisions advertise multiple portals for buying and selling second-hand products so that, only with the use of the internet, without infrastructure, interested users can obtain benefits by giving a new destination to their belongings, which they had temporarily abandoned. This way of introducing goods to the market is what is framed by the collaborative economy models or sharing economy. Surely this concept is totally new to you, but perhaps not so much the names of companies such as Uber, Wallapop or Vinted.
To bring this economic model closer to users and inform about the favorable and unfavorable situations that revolve around it, we have prepared a summary of the sharing economy or sharing economy. So, if you want to know more about how the sharing economy works, what are the different elements of the sharing economy and what are its benefits, keep reading this Green Ecologist article about what is the sharing economy and examples, where you can also find out more about the existing conflict and the limits that this economic development model presents.
What is the sharing economy and how does it work
The sharing economy is a new model of economic development, based on access to resources and their benefits through the provision of services, but without the need to become their owners, which works essentially through the exchange. But, how the sharing economy works exactly?
Driven by the studies of Gansky (2010) and Botsman and Rogers (2010), the collaborative models have gained special relevance in recent years, thanks to the technological development and communication networks, such as the Internet, used as a tool to meet the needs of consumers.
In fact, in Gansky's book The Mesh: Why the Future of Business is Sharing, the author identifies four distinctive features in sharing economy businesses:
- First, they offer something that can be shared.
- To do this, they make use of mobile networks.
- These goods that they offer are mainly physical.
- Finally, they base their marketing strategy on word of mouth and social media advertising.
For this type of economy to materialize, as Botsman and Rogers point out in their publication What’s mine is yours: the rise of collaborative consumption it is essential:
- Believe that it is possible to properly manage the commons.
- Trust the people who are part of these economic platforms.
- The critical mass.
- The temporary disuse of the resource used to offer a service.
Finally, it is worth highlighting the heterogeneous nature of this type of collaboration economy - it encompasses numerous activities and production processes that can even be antagonistic - as it has raised significant controversy because in certain sectors it can be very favorable and result an opportunity for the labor market, while in others it is a risk.
Types of sharing economy
Depending on the purpose that users and companies have, they are distinguished 4 basic activities from which the collaboration economy can develop:
- Collaborative consumption.
- Collaborative production.
- Collaborative learning.
- Collaborative financing.
Taking into account the forms it presents collaborative consumption it is possible to distinguish:
- Product-service systems: where users can pay to use a product, without becoming the owner (Airbnb, eBay or Uber).
- The redistribution systems: in which the goods that are no longer useful for some people are used by others who need or want them, increasing their useful life (Wallapop or Vinted).
- Collaborative lifestyles: in which less physical or tangible goods are shared or exchanged, such as time or space (Blablacar).
Referring to the second of the activities, collaborative production refers to the design, development and distribution of collaborative products and projects.
In this same line, collaborative learning It contemplates free and open access to reports, books, readings (for example: Mooc and Coursera platforms) and, therefore, collaborative teaching and the contribution of knowledge (as is the case with Wikipedia).
Finally, in collaborative financing stand out, on the one hand, the crowfounding or the direct and mass financing of a project and, on the other hand, the peer-to-peer (P2P) lending that connects potential investors with those who need a loan. Alternative currencies and group insurance policies (Wesura) are also included.
Examples of the sharing economy
As stated in the article by Picazo and Martínez (2016), the main sectors of the collaborative economy from 2005 to 2015 they were, in this order, from highest to lowest involvement: transportation, accommodation, financing and the exchange of services and products.
In addition to those shown in the previous section, below are shown more examples of sharing economy:
- Couchsurfing that favors cultural exchange between people through free accommodation at the destination.
- LETS systems (by its initials in English, Local Exchange Trading Systems) or barter.
- Crowdsourcing It constitutes a form of collective work in which people who do not belong to the same company or institution work in a coordinated way on the same project or product (companies such as Lidl or Heineken stand out).
- Time banks that allow the exchange of services, taking into account the hours. In the Valencian Community (Spain) it is possible to find, among others, the Xàbia time bank and the SJM Valencia exchange network.
- Landsharing to promote cultivation on abandoned land.
- Local or social currencies exchangeable for real money, as with Hub Culture.
- LendingClub for the loan of money between individuals.
Advantages of the sharing economy
As has been commented in previous sections, the collaborative economy generates positive externalities that favor its implementation and success in certain sectors. Between the benefits of the sharing economy it should be noted:
- It facilitates the forms of consumption.
- It allows individuals to obtain additional or extra income, avoiding the presence of intermediaries.
- It favors a more efficient management of resources.
- It introduces new services to the market, at a more affordable price, fostering positive competitiveness and innovation.
- Contribute to the circular economy.
- At an environmental level, it allows reducing the ecological footprint of consumption on users and pollution.
- At the social level, it favors the creation of social and community ties. In addition, it also contributes to alleviating social problems such as hyper-consumerism and poverty.
- At the governance and management level, it allows the incorporation of participatory and inclusive models.
- Finally, it is an important source of knowledge and knowledge that contributes to personal growth.
Disadvantages of the sharing economy
Knowing the collaborative business models that have been mentioned throughout the article, it is possible that we can identify some of the problems that have taken place and that, without a doubt, mark the disadvantages of this type of economic model. A recent case could be the conflict between Uber and Taxis. On this basis, the major drawbacks of the sharing economy are:
- The unfair competition that the appearance of these types of collaborative businesses provokes with respect to traditional ones.
- It lacks regulation, so consumer rights are abandoned. This, in addition, favors the rapid expansion of this type of business.
- This same lack of regulation puts at risk the labor relations of the companies with the workers, who in most of these cases work for hours and under the condition of self-employed. Here the controversy of the case of the riders or delivery men who travel by bicycle.
- It favors the appearance of monopolies in certain sectors, as opposed to one of its greatest benefits, which is to contribute to the elimination of poverty.
- The difficulty of existing cooperatives to adopt this type of economic model.
- The range of collaborative platforms that can exist on the Internet is so wide that users cannot know all of them, which leaves those that have gained less fame or diffusion at a disadvantage.
If you want to read more articles similar to Sharing economy: what it is and examples, we recommend that you enter our category of Society and culture.
Bibliography- Millán Diaz-Foncea, Carmen Marcuello Servós, GESES Research Group, Zaragoza's University. Manuel Monreal Garrido, IUDESCOP - University of Valencia. (2016). Social Economy and Collaborative Economy: Lace and Potentialities: https://zaguan.unizar.es/record/69619/files/texto_completo.pdf
- Alfonso Sánchez, R. CIRIEC-Spain, Magazine of Public, Social and Cooperative Economy, no. 88, December, 2016, pp. 230-258. Center International de Recherches et d'Information sur l'Economie Publique, Sociale et Coopérative, Valencia Spain. Sharing economy: a new market for the social economy: https://www.redalyc.org/pdf/174/17449696008.pdf
- Mª Teresa Méndez Picazo, Complutense University of Madrid. Mª Soledad Castaño Martínez, Univ. Of Castilla-La Mancha. (2016). Keys to the Collaborative Economy and Public Policies.
- Economists Without Borders, nº12 D. (2014, January). Collaborative Economy: http://www.ecosfron.org/wp-content/uploads/DOSSIERES-EsF-12-Econom%C3%ADa-en-colaboraci%C3%B3n.pdf
