In this case study, you are required to analyse the economic impact of the rise of the 'shared economy 'or 'collaborative consumption' on a particular industry or market. This concept relates to the peer-to-peer-based activity of obtaining, giving, or sharing the access to goods and services, coordinated through community-based online services.
[https://www.researchgate.net/publication/255698095_The_Sharing_Economy_Why_People_Participate_in_Collaborative_Consumption, accessed May 10, 2016]
As a starting point, refer to Attachment 'All eyes on the sharing economy' The Economist, 3 March 2013 and the above article. Select an industry or market for your study and then consider the following questions:
- What is the likely effect of the entry of such peer-to-peer rental schemes on the structure of the market. What is the effect on competition, prices, quantities traded and profits?
- What is the basis of peer-to-peer rental schemes advantages, if any, over existing services provided?
- What are the likely benefits of such schemes for consumers?
- What might be the basis of existing providers objections to the entry of such schemes into the market?
- What are some of the challenges of the entry of such schemes for government regulation of the market or industry?
Attachment:
'The sharing economy: All eyes on the sharing economy', The Economist, 9 March 2013
http://www.economist.com/news/technology-quarterly/21572914-collaborative-consumption-technology-makes-it-easier-people-rent-items
'Collaborative consumption: Technology makes it easier for people to rent items to each other. But as it grows, the "sharing economy" is hitting roadblocks.
Why pay through the nose for something when you can rent it more cheaply from a stranger
online? That is the principle behind a range of online services that enable people to share cars, accommodation, bicycles, household appliances and other items, connecting owners of underused assets with others willing to pay to use them. Dozens of firms such as Airbnb, which lets people rent out their spare rooms, or RelayRides, which allows other people to rent your car, act as matchmakers, allocating resources where they are needed and taking a small cut in return.
Such peer-to-peer rental schemes provide handy extra income for owners and can be less costly and more convenient for borrowers. Occasional renting is cheaper than buying something outright or renting from a traditional provider such as a hotel or car-rental firm. The internet makes it cheaper and easier than ever to aggregate supply and demand. Smartphones with maps and satellite positioning can find a nearby room to rent or car to borrow. Online social networks and recommendation systems help establish trust; internet
payment systems can handle the billing. All this lets millions of total strangers rent things to each other. The result is known variously as "collaborative consumption", the "asset-light lifestyle", the "collaborative economy", "peer economy", "access economy" or "sharing economy".'