Competition Mechanisms in the Sharing Economy

In recent years, the sharing economy has experienced rapid growth across the globe in terms of the number of participants and transactions, as well as profits. Experts claim that the sharing economy offers new possibilities for entrepreneurship, reducing operating costs, creating new jobs, increasing the effectiveness of economic systems, giving better allocation of resources and assets, as well as increasing the competitiveness of numerous sectors and the quality of life for consumers. The purpose of this article is to study the competition mechanisms utilized by online platforms operating in the sharing economy. Case studies were conducted on 20 leading online platforms operating in the main sectors of the sharing economy (e.g. transportation, tourism, finance, catering, education, leisure, animal care), which rendered it possible to identify 5 different competition mechanisms, ranging from aggressive, profit and economic advantage-oriented competitive pricing to pro-social, non-price competition based on non-profit activities, as well as offering social and epistemic advantage. The main actors in the sharing economy apply various price and non-price competition mechanisms. Nevertheless, in practice, users are frequently “forced” by online platforms to compete for customers using pricing. This happens especially in situations where both the prices and the process of matching providers with recipients are regulated top-down by the platform. Online platforms frequently offer service providers no freedom in terms of decision-making. Moreover, online platforms, by using inflated and hardly credible ratings, render users unable to use non-price, reputation-based competition mechanisms, which, experts claim, may lead to the creation of a new form of precariat.