What is a Collaborative Economy – Pros and Cons of the Sharing Economy

Carsharing, crowdfunding, crowdfunding. The terms related to the collaborative economy have crept into our lives without noticing. However, few know the real meaning of this new way of life. And it is that in this huge mixed bag, there is room for concepts as varied as knowledge, consumption, production or finance.

What is the Collaborative Economy?

Popularized in the 2000s by entrepreneurs Lisa Gansky, Rachel Botsman and Roo Rogers, the expression collaborative economy is based on using technology for their benefit: thanks to it, users can organize themselves to achieve a benefit – economic good, well-produced, well cognitive.

Examples of Collaborative Economy Platforms

Thus, among the many examples that come to mind when talking about the collaborative economy, car-sharing platforms such as Blablacar arise. This is a company created to serve as a link between travelers and drivers so that both parties benefit from sharing a vehicle: the driver reduces costs by charging the passenger a price, and the passenger pays less for a journey than it would be more expensive if you traveled by bus, train or plane.

Airbnb is another clear example of a collaborative economy. The platform is the link between landlords and tenants of the accommodation, which allows both groups to take advantage of the benefits. The owners of the houses manage to rent their properties, while the tenants pay less money than if they spent the night in a hotel or hostel.

Although these two companies are the most notorious in the world of the collaborative economy, there are many more that have carved a niche to change the traditional model of consumption. Thus, Uber has become one of the most popular forms of transportation in large cities. The platform allows connecting people who need a transfer and vehicle owners who act as drivers.

Other platforms such as Wallapop or Chicfy also promote the circular economy. The first puts people who want to sell something they no longer use in contact with those who may need it. In the case of Chicfy, this swap is only limited to the field of clothing. In either case, the basis is in the reuse of goods.

The Advantages and Disadvantages of the Sharing Economy

Currently, the possibilities to take part in the collaborative economy are innumerable. There are so many platforms dedicated to it that counting them would be a permanent job. Given this fact, it is worth asking why new tools that favor the ‘sharing economy appear every day. The answer is obvious: the collaborative economy brings many advantages. These are some of the main ones.

Less money: the products or services offered on this platform have a lower cost than those acquired or contracted traditionally.

Caring for the environment: the platforms that promote collective transport reduce CO2 emissions. A car carrying four people will always be better than four cars carrying one person.

Help to start a business: the collaborative economy has encouraged many entrepreneurs to create their platforms. In addition, systems such as ‘crowdfunding‘ –a collaborative method of financing projects– have helped carry out ideas that otherwise would never have received the necessary subsidy.

More to choose from: Consumers have access to alternatives that, had it not been for sharing economy platforms, would not have been available to them.

The ‘human factor’: the collaborative economy fuels social relationships, dialogue and solidarity.

But not everything is rosy in the ‘sharing economy’ model. Being a new economic model, the current legislation does not cover many cases where collaboration between users comes into play. 

It is only necessary to remember the taxi strikes against Uber in several European cities and how taxi drivers demanded rights for having paid for high-priced licenses and insurance.

The lack of regulation and the possibility of unfair competition are some of the disadvantages of this new model of consumption and business. In addition, the absence of legislation entails a lack of user protection.

And it is that although the European Union supports these forms of exchange, the regulations are still far from having given shelter to all the assumptions that may arise. There could be cases where the collaborative economy is used unorthodox. The controversy is served when it comes to new business models.