The downside of Uber, Airbnb and the sharing economy

Andy Hira

WITH the emergence of internet-based technologies, the sharing economy is developing as a new and rapidly growing sector of the economy, with tech giants like Uber and Airbnb at the forefront.

A study co-led by SFU professors Andy Hira and Katherine Reilly found that despite the benefits of reducing transaction costs and creating unprecedented access to both buyers and sellers there is a down side to the sharing economy as well. This largely unregulated sector creates a plane of unfair competition with traditional industries by advoiding the usual taxes, licensing fees, personnel training costs, insurance fees and other regulatory headaches.

In this study published by the Journal of Developing Societies, the researchers analyzed the advantages and disadvantages of Airbnb, Uber and other internet-based platforms participating in the sharing economy.

“The success of these new platforms have prompted a steep decline in their respective industries,” says Andy Hira. “Whether in the hotel or taxi industry, we’re seeing a loss of employee benefits and job insecurity. The sharing economy is here to stay and new regulatory frameworks and government support can move us towards enhancing the positive aspects of the sharing economy and reducing the negatives.”


Fast Facts:

  • The anticipation of Uber entering the Metro Vancouver market has negatively impacted the value of taxi licenses, which was once valued at $800,000 to $1 million only a few years ago
  • The popularity of Airbnb has prompted Metro Vancouver mayor to change regulations surrounding short-term housing rentals to free up 1,000 rentals to help alleviate the low supply of long-term rentals
  • Uber has received a $70 billion valuation
  • Airbnb has received a $31 billion valuation


Link to study