The Sharing Economy and Competition

By Max Huffman (Indiana University Robert H. McKinney School of Law)

The chapter deals with the topic of the sharing economy, with an emphasis on ride sharing due to its uniquely broad worldwide absorption and the commodity nature of the services provided. It begins by examining the sharing economy in general, studying its definition, its history, its growth world-wide, and its economic rationale. This introductory discussion observes recent explosive growth driven by instant mass communication combined with either increasing willingness of regulators to accommodate technology-based innovation, or inability of regulators to impede it.

The chapter analyzes the sharing economy as a disruptive force in regulated service sectors. The definitional features of the sharing economy include enterprise structures that may be able to serve as alternatives to public regulation, resolving the trust problem that limits economic activity. The impact of the sharing economy can therefore include overcoming failings in regulation, including corruption and stasis. The chapter recognizes the countervailing problems with privatizing the regulator’s role, including presenting safety and privacy concerns as well as transition costs that uniquely impact participants in regulated markets.

The chapter then analyzes the host of competition policy issues raised by the sharing economy, discuss how jurisdictions have so far handled those issues, and propose best approaches to resolving those issues. Competition policy questions that have arisen or can be expected to include problems in market definition, firm structure, monopolization, and cartelization. These questions, all of which impact the service market in which consumers are affected, have flip-side questions in the labor markets.

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