Today, who has extra space in their home

technological systems are becoming increasingly innovative where it is possible
for almost any adult to make extra money at their own convenience. These organized
systems include providing for-hire transportation services (e.g. Uber, Lyft)
and short-term lodging services (e.g. Airbnb). Looking at the larger picture,
these platforms contribute to what is called the “sharing economy”. According
to the Federal Trade Commission (2016), the sharing economy “involves
peer-to-peer platforms between the buyers and sellers who use technology to
facilitate low-cost transacting”. This is a fairly new type of economy, and has
been increasingly popular among millennials since their everyday lives are
becoming more tech-centered. The use of technology such as smartphone
applications to assist with this sharing economy has made exchanging value easy
and efficient. For instance, anyone who has extra space in their home can
quickly set themselves up to become a host for random travelers on the Airbnb
app, and charge money for whoever decides to stay in their abode. Likewise,
people who are looking for a place to stay for relatively affordable prices can
search for hosts on the same app. However, these new forms of technology can
often challenge existing systems which require much decision-making on how it
should be dealt with.

How the sharing economy differs from the
traditional economy is based on the governmental regulations that are enforced
for businesses participating in each of these economic systems. For example,
all traditional services such as hotels and taxis must follow a strict set of
safety standards that are regularly checked by the government in order to serve
their customers. On top of these safety regulations, traditional businesses are
required to pay related taxes to the government. On the other hand, since
sharing economy businesses have recently emerged, they come with many safety
and legal grey areas. These services do not follow the same high expectations
that traditional businesses do, and the government is still trying to figure
out how systems in this new economy should be regulated. The main issue lies in
whether sharing economy platforms should be regulated the same way that
traditional businesses are regulated or if the sharing economy businesses
should be left alone to continue their current practices. Additionally, a
broader question that may stem from this is how
these new platforms should be regulated. 

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            On Medium, author Zak Stone (2015) published
a story about how his father died from a rope swing in a Texas Airbnb rental. Stone
also discussed the general safety concerns in these types of hospitality
industries that allow “virtually anyone to put up a listing and become a host,
and they do not perform background checks on users”. Unlike traditional hotels,
the hosts are not required to be educated properly on security and safety matters.
These sharing economy platforms do not have the restrictions that traditional
services do to prevent dangerous situations such as the one that Stone’s father
had faced. This is the largest reason why peer-to-peer services should be regulated like traditional
businesses by means to protect both the providers and consumers who use them,
but with extra regulations to better fit the nature of these non-traditional
services. Examples of “providers” are the drivers or hosts listing themselves
on the platforms, and the “consumers” can include the passengers or guests that
the providers serve. When it comes to the types of rules that should be
enforced on sharing economy platforms, safety regulations should be at the top
of this list since it can put the most direct impact on platform users. Furthermore,
it is the authority’s (both the government and creators of information systems)
ethical responsibility to put human life at the forefront over other goods. In
other words, preventing the risk of someone’s life should be valued more than
increasing any type of profit, even if it means that protecting platform users
could result in some financial loss. Unfortunately, many safety lawsuits have
been recently made on platforms such as Uber for not having the proper regulations
or lacking strong enforcement (He, 2017). This is why these services need to be
regulated the same way that traditional services are being closely monitored by
the government. In addition, the safety regulations should not only aim to
protect direct users of the peer-to-peer services but also third parties, such
as pedestrians who don’t use ride-sharing systems or neighbors of the short-term
lodging hosts. Since these newer platforms provide similar services to
traditional services, such as giving someone a place to stay or offering a
ride, sharing economy services should at
least follow all the basic regulations that currently exist for traditional
businesses. Having the sharing economy platforms abide to the same regulations
as the traditional services will set an even baseline for both sharing economy
services and traditional economy services. This fair baseline will prevent the
sharing economy from taking advantage of their abilities that could result in
harming the safety of its consumers.

With platforms such as Airbnb and Uber
increasing its impact on diverse types of users these days, it’s important for
all of these audiences to be protected from not only the potential safety
issues, but also from discrimination or human bias. Since these new services
often use technology in the form of an app to connect people, this unique form
of communication might give rise to discrimination. For example, someone who’s
looking for a place to stay could decide to not choose the home with an Asian
host, just after seeing their profile image on the Airbnb app. Judging
characteristics “such as race and gender in online profiles can impact pricing
or lead to sellers rejecting customers” as well as customers rejecting sellers
(Karsten, 2017). This is where these peer-to-peer services might need an extra
set of laws to prevent discrimination in the world of virtual identification to better “embrace the innovations that Uber
and others have introduced” (Federal Trade Commission, 2016). Traditional
services are currently being regulated with the public accommodations law while
the rules are unclear for services that are heavily based on using technology.
In addition, the regulations that should be enforced on sharing economy
platforms should especially address the disadvantaged, so that minorities and
the disabled are not discriminated from using the sharing economy services. In
2014, complaints about many San Francisco Uber drivers have been reported where
“blind customers had summoned rides only to have drivers pull away when they
noticed the customers had service animals” (Schmitt, 2017). This is one of the
many examples to show how peer-to-peer platforms are not following the
disability rights laws, mainly because they are not convinced that these rules
apply to them. With many unique technological services rising such as Uber and
Airbnb, they should be further regulated by enforcing additional rules
specified for each platform. With these extra regulations, it can allow
peer-to-peer platforms to further aim to assist the underserved and increase
its inclusiveness.

Sharing economy markets seem to compete
with other markets by not only avoiding or not having regulations that protect
the public but also rules relating to taxes. Additionally, traditional
suppliers have complained about and have been negatively impacted by this
“unfair competition” since they are required to follow more tax rules. With
that being said, sharing economy platforms should be subject to the same tax
regulations that traditional businesses follow. Without these restrictions,
sharing economy businesses will continue to have the upper hand and drive
traditional markets out of business. Enforcing taxes on peer-to-peer platforms
will not only prevent too much power in one market, it will also support the
government directly by helping to regain lost tax dollars. Lastly, leveling the
field by having these platforms pay the appropriate taxes will reduce the harm
on cities that get deprived of revenue (Federal Trade Commission, 2016).

Many people identify the sharing economy
as a system that is based on trust. An example of this “trust” is how
individuals are willing to buy services from strangers or non-professional
sellers. These individuals trust and assume that the services will place them
in safe hands. Because the sharing economy is based on this “trust”, many may
argue that it does not require to be regulated by the government and that it is
capable of regulating itself. In other words, many may believe that the “trust”
in sharing economy platforms is its
regulation. Specific mechanisms of how this trust and safety is maintained
include the use of reputation rating systems by platforms. These reputation rating
systems can allow “both buyers and sellers to rate one another, and give the
opportunity to rate along different dimensions of the product (e.g. the quality
of communication or the quality of the good itself)” (Federal Trade Commission,
2016). Many will say that profit is a more powerful motivation for quality than
“regulatory compliance”. For instance, if you are a host who wants to make
money, then you would want to make sure that your home is as safe and clean as
possible to keep attracting customers. Thus, it is often argued that such
mechanisms actually protect the direct stakeholders who use peer-to-peer
platforms. Since sharing economies are organized and function differently from
traditional economies in the sense that it is built upon “trust”, then it
should not have the same regulations as traditional economies. Overall, it can
be believed that these new tools such as reputation rating systems provided by
the technological platforms of sharing economies is enough to ensure that no
external regulations are necessary.

However, the issue with the argument
above is that it’s assuming the sharing economy is based on complete trust. It is true that the
sharing economy might not need governmental regulations due to the idea that
it’s based on trust, but it’s nearly impossible for that trust to be
maintained. Trust mechanisms can often lead to inconsistency if people decide
to cheat the trust system. Furthermore, people can easily be deceived in online
communities by posting fake reviews; and large businesspeople can start to take
advantage of this “trust” system, not just regular people who are looking for a
couple of extra dollars. Reputation rating systems do not function ideally in
the sense that ratings can often be biased. For instance, app users might feel
pressured to leave either positive reviews or no reviews at all rather than
posting negative feedback. Similarly, people tend to leave reviews for extreme
experiences since their emotions could be strong enough to write about certain
positive or negative experiences towards someone’s service. The trust system
could regulate itself if everyone
behaves fairly. Unfortunately, this is usually not the case and the
effectiveness of a self-regulation mechanism under all circumstances should be
questioned. The Federal Trade Commission also suggests that there should be a
“real enforcement mechanism” that includes “recordkeeping, inspections, and
strict fines”, which is similar to how traditional economy services are being
regulated. Most importantly, regulation of these sharing economies can actually
lead to trust since it ensures that direct stakeholders are participating fairly.

As the sharing economy begins to rise and
become more dominant in today’s society, it should deserve to be carefully
looked at in regards to how it’s currently being regulated and how it should be
regulated. From there, it should be decided that due to how sharing economies
manage safety, discrimination taxes, and how traditional economies are
currently monitored, sharing economies should at least follow the same rules. Thus,
sharing economies should require further regulation to prevent various matters
from going out of hand.