The sharing economy

GLOBAL INVESTOR 2.15 — 06
The rise of
peer-to-peer
businesses
TEXT CHIARA FARRONATO AND JONATHAN LEVIN
he spectacular growth of companies such as Uber and
Airbnb, and the ongoing debate about how to regulate
them, has focused attention on businesses that are using
Internet and mobile technology to create marketplaces or
assignment mechanisms that match up disparate buyers and sellers.
These businesses can be found across a broad swath of industries –
transportation (e.g. Uber, Lyft, Blablacar, Didi Kuaidi), accommodation
(Airbnb, Kozaza, Couchsurfing), household services (TaskRabbit,
Care.com), deliveries (Postmates, Instacart), retail commerce (eBay,
Etsy, Taobao), consumer loans (Lending Club, Prosper), currency
exchange (TransferWise, Currency Fair), project finance (Kickstarter),
computer programming (oDesk, Freelancer) – and countries. In some
cases, these companies are trying to create more efficient or lowercost
versions of consumer products such as taxi service or small loans.
In other cases, they are trying to create services that many people
did not have access to, such as on-demand delivery service, or startup
business financing.
The media has tried, with only partial success, to find a label that
describes what these new businesses are doing. For instance, the
term “sharing economy” captures the idea that people can sometimes
have a spare asset (a seat in their car, a room in their home, an unused
lawn mower) and sometimes be in need of that same asset. It is an
apt description for companies such as Blablacar, Couchsurfing and
Peerby that are trying to create communities where people exchange
rides or overnight stays or household goods. Sharing economy seems
less apt when applied to marketplaces such as Etsy, where small
producers sell craft goods, Prosper, where individuals can make consumer
loans, or Care.com, where nannies or caretakers offer their
services. The participants’ roles in these markets are more clearly
defined, and new goods, money and time are less obviously viewed
as spare assets to be shared. Instead, these businesses sometimes
refer to themselves as peer-to-peer to capture the idea that both
buyers and sellers tend to be individuals or small firms, even if their
roles are more clearly defined.
Restructuring the marketplace to facilitate trade
We will use the term peer-to-peer as a general umbrella even though
in some of the examples above, the buyers or sellers sometimes can
be professionals or larger firms and arguably not “peers,” and despite
the fact that the businesses above are not necessarily organized in
the same way. For instance, companies such as Airbnb, Care.com
and Etsy are set up as decentralized marketplaces. They enable sell-