Separating Sharers from Capitalists Is the Sharing Economy’s Biggest Challenge

Mar 04, 2014 7:30 am

Skift Take

Sundarajan is a bit of a sharing industry pet with his Pollyannaish push for self-regulation. Surely an academic of his stature is smart enough to realize he’s being played.

— Samantha Shankman

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Zbigniew Bzdak  / Chicago Tribune/MCT

Limousine driver Florian Bucea checks his Uber service in Chicago, Illinois, on March 25, 2013. The service allows riders to schedule service through a phone app and dispatches drivers. The company wants to expand service to the Chicago suburbs. Zbigniew Bzdak / Chicago Tribune/MCT

There’s little love lost between regulated industries and the tech start-ups seeking to disrupt them. The US’s national trade association for taxis just launched a website urging unhappy users of online car services like Uber to report bad experiences to the local authorities.

The challenge for cities and their residents is finding a way to separate the cartel-like benefits that taxi companies enjoy when their numbers are artificially limited—a key reason why there’s demand for services like Uber that can offer something better—from common-sense rules intended to keep customers safe.

It won’t help, however, to pretend that Uber is something it isn’t. That’s a mistake made by Arun Sundarajan, a business-school professor at New York University, who argues that the sharing or peer-to-peer economy—jargon for companies that rely on the internet to facilitate deals directly between people rather than between people and companies—on former taxi or limo drivers, or people building a business on top of the company’s platform.

Sundarajan suggests that these companies can regulate themselves because government can’t keep up with the fast-paced peer-to-peer markets. Whatever the truth of that argument, Uber isn’t peer-to-peer: It is about connecting customers with established businesses, through a marketplace which is eager to avoid any liability for the transactions it clears. And that’s an area where self-regulation doesn’t have a very rosy history—it helped bring you the Libor price fixing scandal and the US housing bubble.

This story originally appeared on Quartz, a Skift content partner.

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