Will the Sharing Economy Increase Inequality?

70 Pages Posted: 20 Aug 2018 Last revised: 20 Sep 2018

Gregory M. Stein

University of Tennessee College of Law

Date Written: September 2018

Abstract

The rise of the sharing economy benefits consumers and providers alike. Consumers can access a wider range of goods and services on an as-needed basis and no longer need to own a smaller number of costly assets that sit unused most of the time. Providers can engage in profitable short-term ventures, working on their own schedule and enjoying many new opportunities to supplement their income.

Sharing economy platforms often employ dynamic pricing, which means that the price of a good or service varies in real time as supply and demand change. Under dynamic pricing, the price of a good or service is highest when demand is high or supply is low. Just when a customer most needs a good or service – think bottled water after a hurricane – dynamic pricing may price that customer out of the market.

This Article examines the extent to which the rise of the sharing economy may exacerbate existing inequality. It describes the sharing economy and its frequent use of dynamic pricing as a means of allocating scarce resources. It then focuses on three types of commodities – necessities, inelastic goods and services, and public goods and services – and discusses why the dynamic pricing of these three types of commodities raises the greatest inequality concerns. The Article concludes by asking whether some type of intervention is warranted and examining the advantages and drawbacks of government action, action by the private sector, or no action at all.

Keywords: Sharing Economy, Dynamic Pricing, Inequality and Justice

JEL Classification: K11, K12, K20, P14, R14, R21, R31, R41, R52

Suggested Citation

Stein, Gregory M., Will the Sharing Economy Increase Inequality? (September 2018). University of Tennessee Legal Studies Research Paper No. 360. Available at SSRN: https://ssrn.com/abstract=3233919 or http://dx.doi.org/10.2139/ssrn.3233919

Gregory M. Stein (Contact Author)

University of Tennessee College of Law ( email )

1505 West Cumberland Avenue
Knoxville, TN 37996
United States
865-974-6812 (Phone)

HOME PAGE: http://law.utk.edu/people/gregory-stein/

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