The Impact of the Sharing Economy

The Sharing Economy

What is the sharing economy? The sharing economy is a term that describes a system where assets and services are shared between individuals. Sometimes with a fee involved, and sometimes without.

There are both benefits and costs associated with the sharing economy. For consumers, the sharing economy makes it a lot easier to access things they need at a lesser cost, but it could have negative repercussions for manufacturers. Instead of buying and obtaining personal ownership of an item such as a car, or screwdriver, there are now ways for people to rent what they need, meaning less cars and screwdrivers will be made and sold.

One of the main reasons the sharing economy has become so prevalent is through the impact of technology. Technology has made sharing assets much easier and cheaper. Mostly everything is now easily accessible, for example, if you need a car you can simply rent one for the day in a matter of minutes via an app on your cellular device. In the past, if you needed a car, most likely, you would have bought one to have on hand whenever you needed a ride. Technology not only makes sharing assets and services easier -- it also takes out the tangible experience that used to occur in order to rent a hotel room or motorbike, and this is why the sharing economy is quickly becoming a large part of our future.

Big Players

Two of the biggest players (also known as the disrupters) in the sharing economy are:

Airbnb, a firm based in San Francisco that allows people to rent anything from cars and boats, to even spaces for travelers in their own homes.

Uber, the rideshare company that connects drivers to riders in cities across the world.

Both of these companies do not own the cars, boats, or homes that are being shared, instead they are simply providing the platform needed for individuals to share their own assets and make money while doing so.

While many are praising the effects of the sharing economy, there are some downsides. Take the taxi industry for example. With the ease at which a passenger can hail an Uber or Lyft car, more and more people are now forgoing taxis and choosing rideshare alternatives instead. Since taxis are highly regulated, there is little they can do to lower their rates and the value of the once golden taxi medallion is now falling drastically, leaving many taxi companies in a serious lurch.

How Far Will the Sharing Economy Take Us?

The sharing economy will only continue to grow as technology continues to innovate and develop. With the invention of driverless carsinvention of driverless cars on the horizon, people may soon be able to send their car over to another person to use for the afternoon without ever having to leave their home. Many companies have already started competiting in the self-driving car race, and driverless cars are expected to become a common sight by 2020.

In fact, there will probably be various apps to easily share most anything you can imagine and with driverless cars running most of the errands, you can bet they will also be used to shuttle items to and from people! Not using your blender, rent it out for the day. Need a beach chair, open your app and get one delivered.

An upside regarding the future of the sharing economy is that resources might be used more sparingly, as less products will need to be produced. If people start forgoing their own cars and opt to join in on sharing cars amongst community members, there will be less waste produced. Fewer cars will be manufactured and less cars will be on the roads polluting the environment. However, the obvious downside is if less products are being created and sold, people will start losing jobs as companies downsize. Also as mentioned above, certain industries, like the taxi industry, might sadly die out as people become more invested in the sharing economy and the companies that come with it.

What do you think of the sharing economy? Are you excited for the changes it will bring, or worried about how it may affect various industries?

This article was updated on June 27th, 2017 to reflect updates on the self-driving car race in relation to the sharing economy.

Felicia is an intern at Ride.Guru. She is from upstate NY, and is currently pursuing a marketing and computer information systems degree at Bentley University. One day she hopes to travel the world and visit every continent.