AbstractRecently,the world has witnessed the emergence of an umbrella term that is often called”the sharing economy”, which has attracted a great deal of attention in thepast few years.Thisphenomenon is spreading rapidly worldwide in a number of industries and marketsand across countless domains in various formats.Thisphenomenon has drawn mixed responses, supporters of the sharing economy claimthat it can yield idealistic outcomes including global equality and sustainableconsumption practices.
Critics condemn the idea of the sharing economy itselfas an attempt to commercialize aspects of personal life previously beyond thereach of the market.1 IntroductionThesharing economy seemingly comprises online peer-to-peer economic activities.The most wildly publicized and talked about domains are rental accommodation,mobility and gifting.2Therapidly increasing interest in the sharing economy is highly credited to thesuccess stories of sharing economy platforms such as Uber, an onlinepeer-to-peer platform providing taxi and ‘ridesharing’ services. These platformsexperienced explosive growth from a small independent start-up company to amulti-billion-dollar international corporation in an astonishingly short amountof time.3Despitethe fact that Uber is frequently charged with unfair pricing practices andworker-related litigation, a 2015 study shows that its active driver base hasmore than doubled every six months from 2013 to 2015.
4Its growth continues to rise in 2017 as the latest confirmed financial resultsof Uber showed that the gross bookings roughly doubled from the 2nd quarter of2016.5Withthe economic benefits that the sharing economy can bring and the frequentreminders about the problems it poses, further examination is required todetermine whether the sharing economy is a blessing or a curse.UsingUBER as an example, I will explore in my research paper both the advantages anddisadvantages that the sharing economy provides in the field of transportation.Iwill begin with a brief review of what the sharing economy is. I will then moveon to introducing Uber and how it works, then I will discuss its impact on thethe field of transportation, specifically the taxi industry. I will concludewith answering the question I posed earlier. What is the sharing economy?Itis not an easy task to offer a definition of the ‘sharing economy’ whichencompasses the variety of ways in which the term is used in practice6.
It has been described as a marginal phenomenon,but the act of sharing itself is not new, sharing practices are the foundationof community life and human according to Thomas Widlok, who explores the term”sharing” through the ages7.Furthermore, the common sense meaning of sharing doesn’t include forms ofexchange that one or more parties can benefit from, and with that, innovationsbased on peer-to-peer asset rental (e.g. Airbnb and Uber) should be excludedfrom the sharing economy. However, they are forefront runners of thisphenomenon.
Addingto the complexity of defining the sharing economy are overlapping terms such ascollaborative consumption8and collaborative economy9. Formy research paper I will use the definition coined by Botsman: the sharingeconomy is an economic system based on sharing underused assets or services,for free or for a fee, directly from individuals.10 What is Uber?Accordingto times magazine, Uber is” … an Android, iOS and Windows Phone appthat connects riders with drivers using their phone’s GPS capabilities, lettingboth parties know one another’s location and removing the question of when theride will actually arrive.
In addition, the tech company also processes allpayments involved, charging the passenger’s credit card, taking a cut foritself (which ranges from 5% to 20%), and direct depositing the remaining moneyinto the driver’s account, all in the background and completely cashless.”11″Ubercapitalizes on convenience. In order to do so, it identifies idle capacity,aggregates it and allocates it to consumers who are willing to pay the price.”It acts as a matchmaker between offers and needs, and it does that at lowercosts, which generates value-add for customers.12Uberis in many ways similar to traditional taxi services, but it has madestructural changes to this old industry that functioned much the same way itdid decades ago, while people in need of a cab had to stand at a street cornerand physically wave to hail a cab, or call the local taxi service to reserve acar at least half an hour prior to the pickup time, Uber and its competitorshave made it possible to secure a car or taxi from any location at any timethrough a smartphone.Needlessto say, these changes had both positive and negative impacts in the field oftransportation in general and on the taxi service industry in specific, so inthe next paragraph I will be examining these impacts. The Impact Of Uber:On the industry:Afrequent belief is that the rise of the “sharing economy” has led to thedisplacement of workers in a wide range of traditional jobs, in this case, I willexamine the impact of the flagship of the sharing economy -Uber- in traditionaltaxi services.
Sodoes the rapid spreading of the “sharing economy” mean the end of traditionaljobs?Sinceits inception in 2010, Uber has caused a lot of controversy. It has encounteredseveral roadblocks. In Europe for example, taxi drivers have rebelled against Uber,and courts have banned or restricted its services for engaging in unfaircompetition with regular taxis, 13that have seen increased competition from these digital services over the pastfew years, and unlike a traditional taxi business, Uber does not own any cars;instead it provides a matching platform for passengers and self-employeddrivers and profits by taking a cut from each ride.
Astudy by Oxford Martin School’s Carl Benedikt Frey has shown that there islittle to suggest that Uber has had negative and measurable effects on theemployment of conventional taxi drivers, meaning that Uber had seemingly oneffects on workplaces in conventional taxi driving services, but rather, accordingto their estimates, the introduction of Uber has led to an increase in theshare of self-employed taxi drivers, which means that if anything, Uber hadpositive impacts on employment of both conventional and self-employed taxidrivers. The study shows that even in one of the sharing economy’s most exposedindustries, traditional jobs have not been displaced.14However,the Uber pricing algorithm, the “Surge Pricing” has raised many concerns aboutwhether or not it is ethical or fair.
Uber’spricing model is dynamic, changing the price to equalize supply with demand. Ifthere is high demand for rides and few drivers on the road, the priceincreases. Uber was severely criticized for seeking profits through surgepricing during natural disasters like snowstorms and recently during theterrorist attack on London15.Itis also unfair competition, that the prices are regulated and changeinfrequently while taxi drivers cannot, on their own, reduce prices or offerthe frictionless payment systems ride-sharing services use.Incomparison to regular taxis, Uber has several advantages beyond lower fares.Instead of waiting in the street or calling a taxi service, passengers canrequest a car through Uber’s online platform and watch the car’s progresstowards their location.
However,although Uber has resulted in a fall in income of around 10% among salarieddrivers, it resulted in a 50% rise in the number of self-employed drivers in acity. While some have seen a loss in income, Uber has created more jobs than ithas destroyed, demonstrated by the staggering expansion of self-employmentfollowing its introduction.16Uberalso offers many benefits to consumers and service providers in terms ofconvenience.Individualsdon’t have to wait around street corners for a taxi to drive by, taxi driversalso don’t have to aimlessly wonder the streets looking for passengers. The appmatches a driver with a passenger which significantly simplifies the process.Furthermore,the app links the customer’s credit card to their Uber account, which transfersthe costs directly to the driver’s bank account. nocash changes hands, which means that payments don’t have to be processedimmediately, and because the transaction is cash-less, a driver doesn’t haveworry about unpaid fares or carrying sizeable amount of cash that might enticea robber.
Passengerscan reserve a ride at any time. There are no specific work hours which offer Uberdrivers more flexibility.17Uberalso may have positive impacts on the environment, according to Juan Matute, atransportation expert at the University of California, Los Angeles. That’spartly because people may take public transit more often if they are certainthey can later use a ride service, but theories also claim that the type of carUber requires and encourages its drivers to get. Uber advocates using relativelynew models, which also plays a part in reducing the carbon footprints. Thecar-sharing services also reduce the need for personal car ownership and thenumber of rides made.181 Widlock.
Thomas2 The people who share3 LASHINSKY, A. 2015. Uber: An oralhistory Online. Fortune.
2017)LASHINSKY,A.” Uber: An oral history”. Fortune, June 3, 2015
2017)4 Solomon, B. “The NumbersBehind Uber’s Exploding Driver Force,” Forbes, May 1,2015
11.2017)5 Helft, M. “Despite Ongoing Turmoil,Uber’s Growth Remains Strong”. Forbes, AUG 23, 2017 < https://www.forbes.com/sites/miguelhelft/2017/08/23/despite-massive-turmoil-ubers-growth-remains-strong/#3a1e06dcc764 > retrieved (12.11.
2017)6 Schor, J.” Debating The SharingEconomy”. October 2014
“Anthropology And TheEconomy Of Sharing”8 collaborative consumption, which isdefined by Botsman and Rogers as sharing, bartering, swapping, lending,trading, renting, and gifting, redefined through technology and peercommunities, changing both what and how we consume. Botsman, R., and Rogers, R.(2010): What’s Mine Is Yours: The Rise of Collaborative Consumption. HarperBusiness9 Collaborative Economy: Aneconomic system of decentralized networks and marketplaces that unlocks thevalue of underused assets by matching needs and haves, in ways that bypasstraditional middlemen.
Examples are: Etsy, Kickstarter, TaskRabbit. Botsman, R.10 Botsman, R.11 PatrickPullin, J.
” Everything You Need to Know About Uber”. Time, November 4,2014
12.2017)16THE ATUDY17 Patrick Pullin, J.”Everything You Need to Know About Uber”. Time, November 4, 2014 com/3556741/uber/>retrieved (2.12.2017)18 Galbraith, K. “Are Uber andLyft helping or hurting the environment?”. The Guardian, January 21, 2016 < https://www.theguardian.com/environment/2016/jan/21/uber-lyft-helping-hurting-environment-climate-change> retrieved (20.12.2017)
com/3556741/uber/>retrieved (2.12.2017)18 Galbraith, K. “Are Uber andLyft helping or hurting the environment?”.
The Guardian, January 21, 2016 < https://www.theguardian.com/environment/2016/jan/21/uber-lyft-helping-hurting-environment-climate-change> retrieved (20.12.2017)