Destructive Sharing Economy: A Passage from Status to Contract

Computer Law & Security Review (Forthcoming)

21 Pages Posted: 11 May 2018

See all articles by Liyang Hou

Liyang Hou

Shanghai Jiao Tong University (SJTU) - KoGuan Law School

Date Written: May 4, 2018


On the surface, the sharing economy only enables users to make the transactions of under-utilized resources over their two-sided platforms. An in-depth exploration of its sudden success reveals three distinctive features of this new business model, namely web search engine, proliferation of smart handhelds and user-generated reputation feedback mechanisms. All of these technological innovations not only inflict destructive changes to our social structure, but also lead to difficulties in an automatic inclusion of the sharing economy into the current regulatory framework. Two changes have raised particular attention. First, sharing platforms are capable of building a democratized private trust mechanism, in addition to the traditional government-monopolized public licensing system. Secondly, the vertical disintegration feature of the sharing economy considerably blurs the borderline between business and consumers, and between employers and employees. For the purpose of establishing a comprehensive regulatory framework for all online and offline activities, it is necessary to differentiate the sharing economy into those with offline competitors and those without offline competitors. With regard to the former, regulators are encouraged to embrace the sharing economy and meanwhile deregulate offline competitors. In relation to the latter, a three-condition analytical framework is proposed in order to strike a balance between promoting innovation and protecting the existing rights of others.

Keywords: Sharing Economy, Destructive Innovation, Trust, Vertical Integration, Regulation

Suggested Citation

Hou, Liyang, Destructive Sharing Economy: A Passage from Status to Contract (May 4, 2018). Computer Law & Security Review (Forthcoming), Available at SSRN:

Liyang Hou (Contact Author)

Shanghai Jiao Tong University (SJTU) - KoGuan Law School ( email )

Huashan Road 1954
Xuhui District
Shanghai, Shanghai 200030
+86-21-6293-4632 (Phone)


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