Economy

Share Economy: An Effective System?

Share economy is an amorphous idea encompassing new emerging economic trends and has attained several meanings across the global economic terrain. The collective idea about the emergence of the sharing economy is still doubtful. Is it the emergence of platforms like Airbnb, Uber, or Taskrabbit? What is the slotting criteria for a new firm to be termed as a part of the share economy? What is the sharing economy in the first place? And how should we distinguish among the various “new economy” models in the headlines? Can sharing, after all, be the way to optimise utility, sustainability and improve efficiency?

Unlike a traditional economy, that was functional during the era of the barter system, in this new age, economic factors and resources are shared instead of being owned by an individual or firm. Share economy works on rentals and collaborative usage of assets. Even though the idea of renting out isn’t something new, the meaning of renting has been revolutionized to the extent that ‘Uber pool’ provides cost efficient share taxi service and several startups have their headquarters in a co-working space which rents out cubicles or workstations on an hourly basis. Share economy is an economy based on trust where the bond between the renters and owner of resources is strengthened. Trust in this new virtual world is hard to define. In nominal terms it can be described as the “willingness to commit to a collaborative effort before you know how the other person will behave. The sharing economy also marks a milestone with respect to establishing internet-enable intimacy- we entrust complete strangers with our most valuable possessions, our personal experiences and our very lives.

However, there is a problem with how people perceive the share economy. For example, we would come across two categories of people: one that thinks that owning a car, house and workspace means that they are well-settled and the other more rational group of millennials that would question the use of owning a car, house or workspace when services can be hired with great ease anyway. The idea behind the two different perceptions and the contrast between owning and sharing is inherent in the ‘perceived enjoyment’ factor when it comes to utilising services. The idea of perceived enjoyment is backed by social conceptions(in terms of trusting strangers with assets and services and building relations) economic conceptions (efficient utilisation of resources and optimising) , practicality(rational approach towards what is a necessity)and sustainability (reducing the pressure on resources as well as conserving the environment).

Two case studies are implicated to understand what it takes for an economy to become a share economy. Japan is against the concept of sharing since they lack trust in strangers even though they comply with rest of the three attributes. On the other hand, Singapore has really developed on the lines of sharing patterns and maintaining transparency with consumers on the pretext of no sort of information asymmetry. Similarly, emerging economies in South Asia , like India, are also moving towards the share economy model, primarily because the people are willing to trust and want to optimise resources at the same time.

But can there be a way, in which an economy not wanting to adopt the share economy model, can be made to adopt it? There is always a way out. Before Aishwarya Rai gained accolades in the international beauty contest, the market for beauty products in India was non-existent, but a simple phenomena changed the perception of such a huge population to an extent that beauty brands like Lakme gained instant fame and success in Indian markets. ‘Enjoyment perception’ which is absent in countries can be borne out of smart planning and shocks which instantaneously change consumer preferences.

As the World Economic Forum rightly points out, the sharing economy is not black and white: it is a spectrum, and it is increasingly crucial to understand its different shades. Ultimately it will become simply part of the economy, without special terminology, but we are not there yet. Collaborative platforms are creating a new digital trust ecosystem. With the abundance of excess capacity, in the high consumerism economy and ultra-digital we are currently living, I think sharing is a great way, not only to lower expenses and minimising the impact on the environment, but also to rediscover and connect with those around us.

Picture Credits : blog.urbact.eu



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