YOURS, MINE, AND OURS: UNDERSTANDING THE IMPACT OF THE NEW SHARING ECONOMY

Abstract

This thesis investigates the timely rise of the new sharing economy and its subsequent effect on traditional industries. While sharing economy companies have engendered significant opposition from competitors, there has been little comparative or empirical study of their quality and differentiation in the marketplace. Little is known as to the extent that incumbent firms should be worried about sharing models, as well. By employing original data analysis, I find that sharing companies are having a minimal, but definitively negative impact on established competitors, and should accentuate this effect as each service grows. To understand the relationship of new sharing economy businesses with existing consumers and producers, I establish two major case studies. First, I conduct a survey of ridesourcing experience and transportation preference among a diverse population of Princeton undergraduate and graduate students, from which I find high awareness and significant use of ridesourcing (ie. Uber, Lyft, etc.) platforms. Subjects also preferred Uber’s ride experience to that of a traditional taxicab across a number of core areas, including higher perceptions of safety. I then utilize an array of data to balance Uber’s recent calculation of driver earnings, finding that Uber and taxi drivers make roughly the same per hour across a number of U.S. cities. Third, with Uber I calculate the cost of exclusively using the service for transport, finding that using Uber is cost effective relative to car ownership if one were to drive less than 5,000 miles a year. Last, I determine that taxicab profitaility in New York (and Chicago) has largely gone unchanged year-to-year, despite a precipitous drop in medallion prices and market confidence. My second case shifts focus to Airbnb’s operation in NYC, where the service has won a significant market share since it first began in 2008. I regress hotel revenue per available room against the change in Airbnb supply over the past five years, finding that Airbnb is, indeed, limiting hotel profitability over time. In order to contextualize these findings, I complete each case study with a discussion of existing regulatory practices. My empirical findings and discussion of regulatory implications are paired to provide sufficient depth for policymakers to intelligently address these issues. Overall, I find that “sharing economy” companies are benefitting from a lack of overall regulation of their services, but that consumer acceptance of these new shared goods and services is slowly swaying demand in favor of sharing models that provide a reasonable measure of regulation.