Here are a couple of interesting academic articles about the sharing economy. The first article is from Parren and Kozinets, it was published in 2018, in the Journal of Marketing. There's one of my favorite articles, Rob Cosmids, and I used to be colleagues at the University of Wisconsin many years ago. I'm a big fan of his research. In this article, the authors seek to provide a better understanding of the sharing economy by developing a topology that can be used to understand the various types of firms that operate in this new economy. They conducted a very extensive ethnographic investigation of nearly two hundred different sharing platforms, including Airbnb, Uber, and TaskRabbit, as well as many others. This investigation included interviewing individuals that participate in these various platforms, reading news articles and press releases, and also a careful examination of their websites. Based on this data collection, the authors were able to organize these various platforms into a two by two matrix. This matrix has two dimensions, consociality, which is the degree to which the members of a platform can engage in social interaction, and second, platform inter-mediation, which is the degree in which transactions flow through a platform provider. Based on these two dimensions, the authors propose that there are four different types of sharing economy platforms; enablers, forums, matchmakers, and hubs. Now it appears that most Sharing Committee firms like Uber and LendingClub, or either matchmakers or hubs. In some, the study provides a very useful tool for understanding the sharing economy, there are different types of businesses that operate in this new emerging space. The second article is by Zervas, Proserpio and Byers. It was published in 2017 in the Journal of Marketing Research. This article provides a very well done and careful examination of the financial impact of sharing economy firms upon traditional businesses. These authors conducted an econometric assessment of the impact of Airbnb upon hotel prices and revenues in the State of Texas. To conduct this study, the authors collected data on over 13,000 Airbnb listings. They also collected data from over 3,500 hotels, including their prices, revenue and occupancy rates. They put all this data together as well as a bunch of other data like Tripadvisor hotel reviews, into a fancy econometric model. The results of this model reveal the rise of Airbnb in Texas has resulted in lower hotel occupancy rates, a decrease in revenue, and lower prices. These effects were strongest in Austin, which is the capital of Texas, and also the home of the University of Texas. They found that in Austin, the entry of Airbnb reduced hotel prices by around 6 percent, and also lowered revenues by about 9 percent. They also found that these negative effects were more likely to occur for lower price hotels that cater to families and leisure travelers, rather than higher price hotels that cater to the business traveling segment. In some the studies suggest that sharing economy firms are important competitor to existing businesses, especially for firms operating at lower price points. First, leverage your prosumers. As we discussed earlier, most sharing platforms rely upon crowdsource to resources. Individuals who provide these resources are often called prosumers, which is a contraction of the word producer and consumer. In addition to providing resources to be shared, prosumers also provide sharing platforms with a variety of other benefits. For example, ride sharing services such as Uber, use prosumers not only to provide vehicles, but also to communicate with riders. Likewise, lending platforms such as Lending Club use prosumers to both provide funds as well as to screen loan applicants. Thus, sharing economy firms should carefully think about how they can fully leverage their prosumers. Second, employ reverse ratings. Traditionally, customers rate providers, not the other way around. However, in the sharing economy, a growing number of platforms employ something called reverse ratings, in which customers not only rate providers, but providers also rate the customers. My doctoral student [inaudible] have conducted some initial research on reverse ratings, and discover that around 80 percent of all sharing economy customers approve of this practice. They believe that giving providers the ability to rate customers is a desirable feature of sharing platforms such as Uber and Airbnb. As we discussed earlier, most sharing platforms are two sided nature, thus sharing economy firms have to consider their ability to not only acquire and retain customers, but also providers. Employing a reverse rating system helps accomplish this goal by giving providers more information about their potential customers, which they can use to help determine if they want to even serve them. Third, ride the surge. One of the major task that sharing platforms need to perform, is to match supply and demand. During busy times, the supply providers may be smaller on the demand for their services. Now, a traditional firm can easily solve this problem by hiring or firing workers as needed. However, since sharing platforms really don't have employees, this traditional approach is really not possible. Some sharing platform such as Uber tackle this problem by engaging in surge pricing. In essence, this technique employs a calculation through an algorithm that increases the price of a shared service in a particular area when the demand becomes high. Surge prices are usually somewhere between 2-3 times higher than normal prices. A growing body of research suggests that surge pricing is an effective way of balancing supply and demand by reducing the number of customers who choose to use a shared service, while also increase the number of providers linked to serve these customers. Fourth, position on price. Sharing economy platforms are believed to have a number of benefits. For example, due to the fact that people are sharing resources such as clothing and automobiles, the sharing economy is often viewed as a more sustainable form of consumption. In addition, because providers are often prosumers, sharing platforms are also viewed as a way to build a stronger sense of community. For example, Airbnb claims that its host are part of a global community who are creating a world where anywhere can belong. Now, these things sound great. Most of us recognize the importance of environmental sustainability and building stronger communities. However, research suggests that these higher-order values are typically not the main reasons why customers engage with sharing platforms. Instead, the key advantage of these platforms appears to be their lower price and greater value. For example, in most places, a ride on Uber is cheaper than a ride in a traditional taxi. Also as we discussed earlier, research indicates that Airbnb seems to compete with low price hotels, but not high priced ones. The sharing economy platforms should market their offerings, as a way to save money rather than save the world.
