Does Sharing Mean Caring? Regulating Innovation in the Sharing Economy

64 Pages Posted: 7 Sep 2014 Last revised: 10 Aug 2015

Sofia Ranchordas

Leiden Law School, Department of Public Law

Date Written: September 7, 2014

Abstract

Sharing economy practices have become increasingly popular in the past years. From swapping systems, network transportation to private kitchens, sharing with strangers appears to be the new urban trend. Although Uber, Airbnb, and other online platforms have democratized the access to a number of services and facilities, multiple concerns have been raised as to the public safety, health and limited liability of these sharing economy practices. In addition, these innovative activities have been contested by professionals offering similar services that claim that sharing economy is opening the door to unfair competition. Regulators are at crossroads: on the one hand, innovation in sharing economy should not be stifled by excessive and outdated regulation; on the other, there is a real need to protect the users of these services from fraud, liability and unskilled service providers. This dilemma is far more complex than it seems since regulators are confronted here with an array of challenging questions: firstly, can these sharing economy practices be qualified as "innovations" worth protecting and encouraging? Secondly, should the regulation of these practices serve the same goals as the existing rules for the equivalent commercial services (e.g. taxi regulations)? Thirdly, how can regulation keep up with the evolving nature of these innovative practices? All these questions, come down to one simple problem: too little is known about the most socially effective ways of consistently regulating and promoting innovation. The solution of these problems implies analyzing two fields of study which still seem to be at an embryonic stage in the legal literature: the study of sharing economy practices and the relationship between innovation and law in this area. In this article, I analyze the challenges of regulating sharing economy from an 'innovation law perspective', i.e., I qualify these practices as innovations that should not be stifled by regulations but should not be left unregulated either. I start at an abstract level by defining the concept of innovation and explaining it characteristics. The "innovation law" perspective adopted in this article to analyze sharing economy implies an overreaching study of the relationship between law and innovation. This perspective elects innovation as the ultimate policy and regulatory goal and defends that law should be shaped according to this goal. In this context, I examine the multiple features of the innovation process in the specific case of sharing economy and the role played by different fields of law. Electing innovation as the ultimate policy target may however be devoid of meaning in a world where law is expected to pursue many other — and often conflicting — values. In this article, I examine the challenges of regulating innovation from the lens of sharing economy. This field offers us a solid case study to explore the concept of "innovation", think about how regulators should look at the innovation process, how inadequate rules may have a negative impact on innovation, and how regulators should fine tune regulations to ensure that the advancement of innovation is balanced with other values such as public health or safety. I argue that the regulation of innovative sharing economy practices requires regulatory "openness": fewer, but broader rules that do not stifle innovation while imposing a minimum of legal requirements that take into account the characteristics of innovative sharing economy practices, but that are open for future developments.

Keywords: Sharing Economy, Innovation, Regulation, Regulated Industries, Taxi regulation, Uber, Airbnb, Competition

JEL Classification: K23, K20, L43, L5, O31, O32

Suggested Citation

Ranchordas, Sofia, Does Sharing Mean Caring? Regulating Innovation in the Sharing Economy (September 7, 2014). Minnesota Journal of Law, Science & Technology (Winter 2015). Available at SSRN: https://ssrn.com/abstract=2492798

Sofia Ranchordas (Contact Author)

Leiden Law School, Department of Public Law ( email )

P.O. Box 9520
2300 RA Leiden, NL-2300RA
Netherlands

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