The sharing economy

GLOBAL INVESTOR 2.15 — 53
Economy
Advent of
the e-market
The sharing economy poses a number of tantalizing uncertainties. While the benefits for consumers
are enormous, we know little about its impact on growth and its long-term implications for labor
markets. In the end, adapting to the rise of the sharing economy will require a shift in mindsets and
policies to mitigate associated risks, while maximizing the benefits. Carl Benedikt Frey reflects on
whether the sharing economy is here to stay, and what it will mean for the future.
INTERVIEW BY GISELLE WEISS
Giselle Weiss: Sharing is a natural human
impulse. But we don’t usually think of it as
fueling an economy that can provide jobs
and quality education, and in general move
society along. What makes the sharing
economy an “economy?”
Carl Benedikt Frey An economy is a
system of production, trade and consumption.
Sharing is the practice of giving something
for free. In many ways the sharing
economy is not sharing in that you actually
pay a price for something. In the case of
services like Uber, obviously if somebody
takes an Uber taxi ride rather than a normal
taxi ride, it’s cheaper, but it is not sharing.
We nevertheless tend to refer to Uber as a
part of the sharing economy.
What is driving it?
Carl Benedikt Frey I see three key drivers.
The first relates to income and inequality.
In recent decades, median wages have
stagnated, while top incomes have surged.
High-income individuals often have unused
assets, while people with lower incomes
are demanding cheaper goods and services,
contributing to the rise of the sharing
economy. Another driver is environmental
awareness. People are already willing to
pay a premium price for a product they think
has been produced in an environmentally
sound manner. Sharing helps the environment.
But you can help the environment and
get a better deal at the same time.
And the third driver?
Carl Benedikt Frey The third and most
important driver is the combination of digitalization
and globalization – in the sense
that you can transfer information and services
across the globe at more or less zero
cost. And that creates opportunities both
for people to buy services from low-cost
locations where labor is cheaper, and
for individuals in deprived areas to access
global markets.
Does the value proposition of the sharing
economy depend exclusively on setting
prices at a discount to existing commercial
offerings?
Carl Benedikt Frey Overall, the value
proposition of the sharing economy is primarily
to reduce costs for consumers and create
more flexibility. The value proposition of
renting a luxury apartment offered by Airbnb,
however, may in some cases be that you’d
rather do that than go to a hotel. The apartment
may be even more expensive than
the hotel, but offer more privacy, for example.
The sharing of goods also signals environmental
awareness, which is increasingly
becoming an important value proposition. >