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Models of the Sharing Economy 1

MODELS OF THE SHARING ECONOMY

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Models of the Sharing Economy 2

Models of the Sharing Economy

With advances in technology, the significance of the sharing economy as a facet of

the global enterprise is on the rise. In shared economy, individuals collaborate with a goal of

sharing underutilized resources through barter and monetary transactions. An effective

sharing economy is comprised of Peer-to-Peer (P2P) marketplaces such as Airbnb and Khan

Academy. Depending on the objective of the marketplaces, the shared economy is split

between capitalist and gift organizations. With the continued use of capitalism as an approach

to resolving the challenges of economic production, the capitalist sharing economy has the

greatest potential to grow as the standard platform.

The success of the sharing economy is founded on its capacity to optimize the use of

under-utilized resources. Despite the fact that there are instances of pure altruism, the vast of

the sharing economy is motivated by profit maximization. In this economic model, people are

driven by monetary incentives to avail their resources such as houses to others (Martin 2016).

As such, instead of individuals exchanging services or goods based on contingent scarcity or

availability, they are turning into the sharing economy with a goal of generating revenue. For

instance, Airbnb and Uber have transformed their act of sharing into their main income

generating venture (Cohen & Kietzmann 2014). In a market where capitalism is the only

viable economic model, only the capitalist form of the sharing economy can succeed.

In most cases, the operations of the sharing economy are strongly based on the

Internet, particularly websites, which acts as intermediaries. These sites have currently

evolved into income generating platforms, charging clients a fee for using their services. For

instance, making a reservation on Airbnb costs approximately 10 percent of the value of

services sought (Sundararajan 2016). While it can be argued that the compensation paid is

intended to cater for costs related to web hosting, the number of sharing economy

organizations worth billions is increasing at an alarming rate. In this regard, it is evident that

Models of the Sharing Economy 3

the sharing economy acts as an alternative to capitalism and the present models of sharing

fails to fulfill the intended goal of this economic model. The heavy reliance on P2P markets,

which are business oriented intermediaries fosters the growth of the sharing economy as a

capitalist platform.

Organisations are continuously altering their business models with an objective of

lowering operations costs and optimizing profit margins. Platforms upon which the shared

economy is built allows companies to significantly reduce marginal costs by allowing

millions to link and share assets at reduced costs (Martin 2016). As organizations in P2P

market strive to lower production costs, they adopt technological developments that nurture

market capitalism. For instance, Airbnb and Uber established shared economy businesses

optimizes on the fluidity of employees created by technology that enables remote transactions

and consequently, lowers workforce-related costs (Sundararajan 2016). Cutting down on

operational spending enables these companies to maximize profit generation and ultimately,

gives them a competing edge in the capitalist markets. With increasing needs for business to

lower marginal costs, the sharing economy is taking form as a capitalist business model.

In comparison to the gift approach, the capitalist model of the shared economy has a

great potential to thrive as the standard platform. The majority of the intermediaries in the

P2P market are motivated by income generation as opposed to the act of sharing. In a

capitalist market, businesses are only concerned with the reduction of marginal costs

resulting in the adoption of business-oriented technology. Introducing regulations in the

shared economy will set forth effective utilization of resources and economic sustainability.

Models of the Sharing Economy 4

Reference List

Cohen, B & Kietzmann, J 2014, Ride on! Mobility business models for the sharing

economy. Organization & Environment, 27(3), pp.279-296.

Martin, CJ, 2016, The sharing economy: A pathway to sustainability or a nightmarish form of

neoliberal capitalism? Ecological Economics, 121, pp.149-159.

Sundararajan, A 2016, The sharing economy: The end of employment and the rise of crowd-

based capitalism. Mit Press.

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