In this booming technological age, American citizens are connected with each other like never before. Innovators are taking advantage of this new-era connectivity to build companies that rely solely on peer-to-peer contact. Companies such as Airbnb, Uber, and Taskrabbit are all examples of companies that network strangers together in order to optimize the wants and needs of both parties in the transaction. In economics, this has become known as the “sharing economy.”
These “innovative” companies are simply eliminating transaction costs by kicking out the middleman. By doing so, people are able to better optimize their time and money and hopefully become a more productive society.
On the surface level, there are many benefits to this trend. Owners make money from underused assets while consumers spend less to acquire these goods and services. Environmentally this can be beneficial as fewer resources are made to produce capital when they can be shared.
Some economists, however, are more skeptical on the matter. Business professor Arun Sundararajan has deemed the movement as “crowd-based capitalism.” As these peer-to-peer transactions continue to grow, they will begin to eliminate the traditional corporate-central modeled economy.
This type of behavior could ultimately have a much larger effect on politics and the economy as a whole. Unemployment would have a new meaning, taxation policies would have to be revised, and an infinite amount of policies and regulations would have to be implemented in order to ensure successful progression.
As these types of businesses continue to grow, it will be interesting to see how the government will attempt to keep a handle on everything.