Transaction costs and the sharing economy

Abstract

Purpose The paper aims to discuss the so-called sharing economy from a business modeling and industrial structure perspective. The illustrative cases examined are Airbnb and Uber. The research question raised is concerned with the extent to which transaction cost theory can be used to explain the changing industrial structures in the application areas that the Internet-based platforms are addressing and how other theoretical frameworks can be helpful in understanding these developments. Design/methodology/approach As the sharing economy topic is relatively new, the paper takes its point of departure in a brief overview of the different issues discussed in the academic literature and the press regarding this emerging phenomenon. The paper presents relevant theoretical approaches to analyzing business models of sharing platforms and industrial structure implications. It, thereafter, presents the cases of Airbnb and Uber to discuss the relevance of the theories put forward. Findings The paper concludes by proposing a theoretical framework for analyzing the structural implications of the sharing economy based on theories on multi-sided platforms, transaction costs and substitution and complementation. Research limitations/implications The research implications are to establish a comprehensive theory framework for analyzing the development of commercial sharing platforms. Originality/value The originality and value of the paper is related to the novelty of topic and the development of a theory framework for analyzing the business models of commercial sharing platforms. Only little has been written from an academic analytical perspective on the sharing economy, and there is a need for developing a coherent framework for analyzing these developments.