April 15, 2014

Share and Share Alike: Regulatory Burdens Threaten to Overwhelm Sharing Services Like Uber and Airbnb

Matthew D. Mitchell

Senior Research Fellow
Summary

Right now, hundreds, maybe even thousands of people in your community stand ready to help you. For a small fee, they’d be willing to lend you their car, their cat or their couch. And you, too, would probably be willing to help them if you could only get connected.

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Everywhere, traditional firms are leading the charge for tighter regulation of their sharing economy competitors. Many of these firms feel that if they must comply with burdensome regulations so should their new competitors. But sometimes this leads to ludicrous rules. Washington, D.C., regulations, for example, require all cabs to have credit card readers on board and cab companies want this rule to apply to ride share firms like Uber as well. In this case, however, the card readers are redundant since Uber payments run through customers’ smartphones (which is part of the appeal of the product).

A more sensible way to achieve equity is to deregulate traditional industries rather than to regulate the sharing economy. There are some signs that policymakers are moving in this direction. Two D.C. council members have just introduced legislation to allow cabs dispatched from smartphones to operate in much the same way as Uber or Lyft.

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