On May
26, 2015, Free State Foundation (FSF) Scholars submitted comments
to the Federal Trade Commission (FTC)
for its upcoming June
9th workshop regarding competition, consumer
protection, and economic issues raised by the “sharing economy.” FSF Scholars
make several key points about the sharing economy’s positive impact and what
the government’s ultimate role should be.
First,
the sharing economy’s positive impact is one of fostering innovation, creating
value, and providing cost savings options for consumers. From a recent PWC
survey, 86 percent of U.S. adults who are familiar with the sharing economy
agree that it makes life more affordable and 83 percent agree that it makes
life more convenient and efficient. Further, the sharing economy is
particularly beneficial for low-income consumers. As stated in a FSF blog,
the sharing economy has shifted consumer preferences from owning to renting,
and the additional benefits and savings low-income consumers accumulate from
this shift has a substantial impact on their standard of living.
Second,
as discussed in a Perspectives
from FSF Scholars entitled “The
Sharing Economy: A Positive Shared Vision for the Future,” the emergence
and success of the sharing economy is unequivocally due to marketplace freedom
and “permissionless
innovation.” The lack of barriers to market entry (such as regulatory
costs, licenses, and start-up fees) has enabled companies like Airbnb and Uber
to quickly emerge and provide their services in many cities and towns
throughout the world.
Third,
fear of competition is not a valid basis for regulation. Traditional legacy
businesses (such as hotel companies or taxicab commissions), which compete with
sharing economy applications, argue that such emerging companies should be
subjected to the same level of regulations and taxes. FSF Scholars argue that
the best way to “level the playing field” is to deregulate down by eliminating
old and unnecessary regulations, not regulate up. Unnecessary regulations can
often be captured by well-established companies or applied in a discriminatory
way by policymakers, leading to government picking winners and losers instead
of consumers.
Lastly,
sharing economy markets have efficient self-regulating mechanisms. Many sharing
applications have online rating systems and feedback information in order to
keep both buyers and sellers accountable and transparent. Other things like
insurance policies and immediate payment systems help mitigate risk. FSF
Scholars believe that by allowing for free-market innovation to flourish,
competition - which we believe is the best form of regulation - will thrive. In
competitive markets, sharing economy applications and its users have the incentive
to provide friendly, safe, and healthy environments, because consumers will
choose better alternatives if they do not.