The Sharing Economy as an Equalizing Economy

36 Pages Posted: 6 Aug 2018 Last revised: 21 Aug 2018

Date Written: August 3, 2018


Economic equality is often said to be the key problem of our time. But information technology dematerializes the world in ways that are helpful to the 99 percent, because information can be shared. This essay looks how one fruit of the information revolution—the sharing economy—has important equalizing features on both its supply and demand side. First, on the supply side, the intermediaries in the sharing economy, like Airbnb and Uber, allow owners of housing and cars to monetize their most important capital assets. The gig aspect of this economy also creates spot markets in jobs that have flexible hours and monetize people’s passions, such as cooking meals in their home. Such benefits make these jobs even more valuable than the earnings that show up imperfectly in income statistics. The law and economics analysis of Hernando De Soto has shown how creating property rights and more formal markets can help those of modest means in the developing world. The sharing economy performs a similar function for people of modest means in the developed world. Second, on the demand side, the sharing economy also creates gains for consumers that largely go to the 99 percent. Airbnb finds them cheaper accommodations in places that may have been unaffordable. But the advantages go beyond price. Summoning a ridesharing car almost anywhere with the press of smart phone is a much closer approximation of having a chauffeur— a hallmark of wealth—than hailing a taxi. The law and economics analysis of Ronald Coase shows how replacing such physical agents with online agents redounds largely to the benefit of those with modest incomes. If the sharing economy has equalizing as well as efficiency features, regulations must be careful not to disturb them. But because the sharing economy permits new entry into markets, incumbents will respond with new regulatory efforts to hamper it. The essay provides a taxonomy of the different kinds of regulation to help preserve the equalizing features from being impaired. The essay ends by showing how the sharing economy more generally problematizes the conventional story of growing material inequality. The dematerialization of the world provides greater opportunities for broadly shared consumption, like that on Facebook, and improves working conditions, particularly for the middling classes. Only by taking account of these trends can we understand the changing relative material conditions of people.

Keywords: Ronald Coase, Hernando de Soto, sharing economy, gig economy, inequality, Uber, Airbnb

JEL Classification: K10, K30, P4, P5

Suggested Citation

McGinnis, John, The Sharing Economy as an Equalizing Economy (August 3, 2018). Northwestern Law & Econ Research Paper No. 18-16, Northwestern Public Law Research Paper No. 18-19, Available at SSRN: or

John McGinnis (Contact Author)

Northwestern University - Pritzker School of Law ( email )

375 E. Chicago Ave
Chicago, IL 60611
United States
312-503-3235 (Phone)

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