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The Rise of the Sharing Economy

March 14, 2017 | By |

Exploring standards-based solutions in a changing marketplace

In this report, commissioned by CSA Group to launch their new CSA Group Research Program, the Mowat Centre discusses the growth of the sharing economy and explores the potential for the use of standards-based approaches in the governance of this sector.

Technological innovation has made the lives of people around the world easier. At the click of a button, it is now possible to conduct a whole host of activities – from renting designer clothes to instantly sharing music with a friend in another country. Indeed, one of the most significant impacts of these new and innovative technologies is how they have enabled much easier communication between individuals regardless of location. This increase in convenience has enabled consumers to access a growing universe of platforms which connect individuals and firms providing a multitude of services.

In the midst of this explosion of online commerce, a host of new business models have emerged. Some of the most innovative and popular of these new models have collectively come to be known as the “sharing economy.” Broadly, the sharing economy is made up of online platforms that provide easy and simple access to a wide range of goods and services enabled by today’s digital technology. The sharing economy is defined by a range of features but, at its core, it involves a shift from the ownership of assets to buying access to assets that are “shared” by many users.

The sharing economy is growing fast and has quickly emerged as a major component of the 21st century economy. Top firms such as Uber and Airbnb are now worth billions of dollars. However, the dynamic nature of these firms’ offerings makes it difficult for governments to keep up with new products and services.

Some have even referred to the sharing economy as a “wild west”, characterized by limited safeguards and uncertain quality control. At the same time, the emergence of the sharing economy is also disrupting long-established industries and drawing complaints about unfair competition from incumbent firms concerned that they are losing their traditional markets.

While some jurisdictions have made real progress in developing governance frameworks capable of responding to some new sharing economy services, others have done little or nothing at all. In most cases where governments have crafted regulatory responses, these efforts have been slow and their results have often been insufficiently flexible to meet the needs of these evolving markets. As a result, it is worth considering alternative approaches to governing the sharing economy that go beyond traditional legislative and regulatory frameworks.

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Standards-based approaches have the potential to deliver, in several critical areas, a more nimble response that could optimize the benefits of the sharing economy. Standards offer a tried and tested approach to ensuring the quality and safety of goods and services built on a broad-based and expert-led process.

In addition to the development of technical standards, standards-based solutions can include the provision of guidance based on best practices, as well as training and certification. In general, standards development processes tend to be quicker and more flexible compared to traditional government-led regulatory efforts – thereby offering a potential middle ground between inaction by governments and often rigid regulatory processes. Standards also present an opportunity for many different types of stakeholders to play a role in responding to challenges in the sharing economy in a unified and consensus-driven way. Such a global approach may be particularly attractive when compared to alternatives whereby the sharing economy is regulated separately and on a piecemeal basis by policymakers in different jurisdictions around the world.

This report examines the role that standards could play in the sharing economy. Overall, the report argues that standards could play a valuable role in this area. To be effective, however, standards must be deployed as a complementary tool that works alongside other governance efforts. Specifically, the report highlights six key areas where standards are most likely to provide benefits – in addressing labour challenges, improving dispute resolution mechanisms, increasing the quality of online reviews, setting adequate safeguards for data-sharing and data protection, safeguarding competition and ensuring the quality of ride-sourcing services – while noting that additional issues in the sharing economy may be better addressed in other ways.

Ultimately, the advent of the sharing economy has raised a number of new policy questions which will require a dynamic, flexible and evolving response – not only by governments around the world but also by stakeholders across a range of fields. Therefore, a multi-faceted approach is needed to leverage the promise and address the potential problems that may emerge with the rise of these new platforms. The Rise of the Sharing Economy illuminates how standards-based approaches can play an important role in achieving this outcome.

View PDF on CSA’s website

Authors

Sara Ditta
Jordann Thirgood
Michael Crawford Urban

Release Date

March 14, 2017

Mowat Research

No. 133

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