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Uber and the Sharing Economy: Global Market Expansion and Reception W04C79

The sharing economy was considered an alternative to conventional business models because it prioritized access to goods, resources, and services, rather than ownership of them.6 This new collaborative consumption model offered economic advantages over traditional business models. Providers generated revenue by utilizing underused assets, and users had increased access to goods and services at lower prices than with traditional providers.7 Sharing economies maximize a good’s capacity, saving time and money for both the producer and consumer.8

Driving Forces

The development of information technology significantly expanded the sharing economy. Smartphones and social media created increased and continuous access to information for consumers, allowing new users to discover and quickly adapt products and services within the sharing economy.9 Sharing in the economy had existed long before and could be thought of as a collaborative economy, but the Internet created a new platform on which the sharing economy could operate. The Internet transformed the sharing economy and enabled it to grow significantly in a short period of time within multiple sectors (see Exhibit 1).10

Exhibit 1 The Sharing Economy in Almost Every Sector

Source: Owyang, Jeremiah. “Collaborative Economy Honeycomb 2 – Watch It Grow.” Web-strategist.com. Accessed 6 Jan. 2016. .

Another driver of the sharing economy was the financial crisis of 2008. The sharing economy emerged as a response to the economic downturn and instability that followed the 2008 financial crisis, resulting in networking and pooling of resources.11

Cultural shifts also helped nurture the development of the sharing economy. In the U.S., car ownership had long been a sign of independence and many people could not imagine their world without owning a car. This was not true for younger generations, however. A survey conducted by the technology and research firm Gartner found that 46% of adults between ages 18 and 24 would prefer to have Internet over a car, while only 15% of baby boomers answered the same.12

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Uber and the Sharing Economy: Global Market Expansion and Reception W04C79

Sustainability and Sharing Economy

There is also a sustainability case to be made for sharing economies. Using goods to their maximum capacity can reduce waste.13 Additionally, proponents of the sharing economy argued that increased utilization of underused resources could reduce the carbon footprint of a good.14 For example, a Fast Company business editorial focusing on innovation claimed that “when measuring carbon emissions, home sharing is 66% more effective than hotels” and “car sharing participants reduce their individual emissions by 40%.”15 Peers, a community that helps individuals find independent work opportunities and benefits, stated that car sharing could potentially reduce up to 72% of U.S. CO2 emissions.

16 By enabling more sustainable consumption, the sharing economy was compatible with economic growth, while simultaneously diminishing environmental impacts through reduced waste and efficient use of existing resources at the level of an individual consumer.17 At a broader societal level, the sharing economy had the potential to push whole communities toward shrinking their carbon footprints.

Social Benefit

Sharing economies also create social benefits. The growth of sharing economies can be described by the “Sharing S-Curve” (see Exhibit 2).18 Generally, sharing economies develop at a local scale, and start- up companies fulfill a niche role. Therefore, sharing economies promote interactions among individuals at this local level, which strengthens communities.19 Although seemingly insignificant, peer-to-peer interactions create meaningful connections between people, and some research even showed psychological and neurological benefits from participating in sharing transactions.20

Exhibit 2 The S-Curve of the Sharing Economy