When Everything is Small: The Regulatory Challenge of Scale in the Sharing Economy

Abstract

The sharing economy — the rapidly evolving sector of peer-to-peer home-sharing and ride-hailing transactions facilitated by platforms like Airbnb and Uber — offers the potential for economic growth, greater sustainability, and expanded access for underserved groups. But the massive number of small-scale activities facilitated by these platforms is also resulting in negative cumulative impacts and exposing regulatory fractures, from the loss of long-term rental housing to discrimination against protected classes to increased burdens on public infrastructure.

This Article contends that scale is a defining feature and fundamental challenge of the sharing economy. Small may be beautiful, but when everything is small, the regulatory challenge is immense. Small-scale activities that once fit the criteria for light or no regulation are occurring at scales at which non-regulation makes little sense. As the sharing economy becomes an increasingly large segment of the public accommodations and transportation markets, the traditional ways we distinguish between activities that we should regulate and those we treat with regulatory leniency no longer fit. Existing regulatory systems, from civil rights and environmental law to consumer protection and tax law, do not map neatly onto the configuration of scale in the sharing economy. This regulatory misfit threatens to result in inequitable and discriminatory outcomes across the sharing economy.

Effective governance of the sharing economy requires a more complete understanding of the role of scale. This Article investigates the implications of scale in the sharing economy, focusing on the prominent sectors of home-sharing and ride-hailing. The Article unpacks how massive numbers of home-sharing and ride-hailing activities are producing negative cumulative impacts and exposing regulatory fractures, which threaten to undermine a range of important public policies — including affordable housing, civil rights, and consumer protection — and considers possible legal regimes for responding to scale.

Keywords: sharing economy, property, land use, local government, zoning, urban planning, municipal, police power, Airbnb, Uber, innovation, scale, regulation, governance, cumulative impacts