The Sharing Economy and Consumer Protection Regulation: The Case for Policy Change

The Journal of Business, Entrepreneurship & the Law, Vol. 8 Iss 2, 2015

Mercatus Research Paper

18 Pages Posted: 9 Dec 2014 Last revised: 6 Jun 2018

See all articles by Christopher Koopman

Christopher Koopman

Mercatus Center at George Mason University

Matthew D. Mitchell

George Mason University - Mercatus Center

Adam D. Thierer

George Mason University - Mercatus Center

Date Written: May 15, 2015

Abstract

The rise of the sharing economy has changed how many Americans commute, shop, vacation, and borrow. It has also disrupted long-established industries, from taxis to hotels, and has confounded policymakers. In particular, regulators are trying to determine how to apply many of the traditional “consumer protection” regulations to these new and innovative firms.

The key contribution of the sharing economy, however, is that it has overcome market imperfections without recourse to traditional forms of regulation. Continued application of these outmoded regulatory regimes is likely to harm consumers. We argue that the Internet, and the rapid growth of the sharing economy, alleviates the need for much of this top-down regulation, with these recent innovations likely doing a much better job of serving consumer needs.

When market circumstances change dramatically — or when new technology or competition alleviates the need for regulation — then public policy should evolve and adapt to accommodate these realities. This paper concludes with some proposals for further research in this area, and a call for a more informed regulatory approach that accounts for the innovations of the sharing economy.

Keywords: sharing economy, collaborative economy, peer-production economy, peer-to-peer economy, ride-sharing, asymmetric information, lemons, Akerlof, Internet innovation, online innovation, rent-seeking, e-commerce, Uber, Airbnb

JEL Classification: H7, K2, L1, L2, L5, L8, L9, M2, N7, O3, R4

Suggested Citation

Koopman, Christopher and Mitchell, Matthew D. and Thierer, Adam D., The Sharing Economy and Consumer Protection Regulation: The Case for Policy Change (May 15, 2015). The Journal of Business, Entrepreneurship & the Law, Vol. 8 Iss 2, 2015; Mercatus Research Paper. Available at SSRN: https://ssrn.com/abstract=2535345 or http://dx.doi.org/10.2139/ssrn.2535345

Christopher Koopman

Mercatus Center at George Mason University ( email )

3434 Washington Blvd., 4th Floor
Arlington, VA 22201
United States

Matthew D. Mitchell

George Mason University - Mercatus Center ( email )

3434 Washington Blvd., 4th Floor
Arlington, VA 22201
United States

HOME PAGE: http://meractus.org

Adam D. Thierer (Contact Author)

George Mason University - Mercatus Center ( email )

3351 Fairfax Drive
4th Floor
Arlington, VA 22201-4433
United States

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