Operational Factors in the Sharing Economy: A Framework

Abstract

Applications of sharing economy, from ride and home sharing to crowdfunding to online freelance markets have been playing increasingly prominent roles in people’s daily lives. An important reason for sharing economy’s rise to prominence is the operational efficiencies it introduces, and the related savings and other economic benefits it unlocks. In this paper, we provide a framework identifying and describing the forces of sharing economy that fuel the success of the novel business models of the concept. In addition, we study two applications, namely ride sharing and group buying, in more detail, analyzing the operational efficiencies created by each business model with the framework we introduced and providing evidence from recent related literature for the efficiency gains they bring about. Finally we discuss some potential downsides and pitfalls that arise as the side effects of these operational efficiencies of sharing economy business models, and the related regulatory issues ahead that may need attention.