Is regulation the right road for the sharing economy?

Winding road with carUntil recently, collaborative businesses have fallen below the radar when it comes to government regulation. The entrepreneurs driving the sector insist this is helping them to experiment, to innovate and, ultimately, to grow. That could be about to change.

Why the regulators’ sudden interest? Three main reasons. First is scale. The rule enforcers are beginning to realize just how big the collaborative marketplace is growing. Another reason is cash. As collaborative start-ups begin to monetise, governments smell taxable revenue. Last, there’s the consumer to consider. Peer-to-peer platforms essentially provide a means for people to exchange services between themselves. Their contractual standing may be fragile, but consumers and providers still need an element of legal protection.

However, the sharing economy will always rest on trust not regulation. The success or failure of collaborative businesses revolves around endorsements and reviews from users. Regulation can help, but it will never be the whole answer. The point is which countries will decide to be proactive by regulating how the sharing economy can operate lawfully and effectively and which other countries will decide to kill it because they have not understood it or have given up to pressures from vested interests.

Red the full story on the Guardian Sustainable Business Blog

 

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