Researcher of the Month
Sharing Economy: Opportunities and challenges for city administrations
“Sharing economy” refers to the increasing trend towards “sharing rather than owning” and is, these days, a predominantly urban phenomenon. People share not only apartments, cars, bicycles, and most recently e-scooters, but also tools, office space, community gardens, and much more. A current study by WU Professor Markus Höllerer and his team demonstrates that city administrations worldwide are confronted with various opportunities and challenges resulting from the sharing economy, and that cities show considerable variation both in their interpretations of the sharing economy and in corresponding governance responses.
The emergence of the sharing economy is certainly one of the most remarkable examples of new ways of organizing and innovative business models in the recent years. Unlike early forms prevalent in rural communities, the modern sharing economy is a predominantly urban phenomenon. Many people put their hopes in the sharing economy as a harbinger of increased social responsibility, sustainability, and ecological transition. This trend, however, presents city administrations with some major challenges, as shown by recent developments also in the City of Vienna (see OBike failure – article in German). Debates range from fair competition to taxation of sharing economy organizations, to ensuring appropriate social security standards for “employees” in the sharing economy. At WU, Markus Höllerer, head of the Institute for Public Management and Governance, is currently conducting a research project in cooperation with the City of Vienna. One specific study is looking at how city administrations worldwide interpret the sharing economy and come up with corresponding governance responses. “The sharing economy presents city governments with some novel challenges: For example, how should the City of Vienna react to the conflicts between Uber and co. and the Vienna taxi industry? What should they do with the multitudes of bicycles or e-scooters strewn randomly about the city streets? Or how about the increasing scarcity of living space resulting from the growing numbers of apartments rented out over Airbnb?” says Höllerer.
Many approaches, little convergence
Höllerer and his team compared position papers issued by global cities, as well as the discussion and decision-making processes behind them, and, in a first step, outlined the main framings of opportunities and challenges the sharing economy is perceived to present. In a second step, the study focuses on the governance instruments city administrations are employing in response. “Our analyses show diverse results. Overall, cities, especially in continental Europe, are still unsure of what the sharing economy really means for their specific situation – and consequently how they should be dealing with it.” The collected data do indicate certain initial trends, however. Cities that generally interpret the sharing economy as societal enhancement are more likely to call in experts and consider providing municipal sharing programs. Cities that perceive the sharing economy as societal endangerment, on the other hand, react with regulation efforts. An interpretation that emphasizes market disruption leads to a stronger orientation of a city’s governance response towards other administrations, both national and international, while cities that see the sharing economy as an opportunity for ecological transition are more likely to turn to comprehensive information campaigns, support measures, and partnerships with sharing economy organizations.
“Our work will help to better understand the sharing economy, in all its diversity and with its many different facets. We point out which governance options city administrations potentially have at their disposal, and which instruments have proven to be practicable in international comparison,” explains Höllerer. “For sharing economy organizations, we offer a systematic overview of the relevant framework conditions; for the citizens using such services, we are trying to create awareness of the inherent advantages, disadvantages, and trade-offs.” The virtual map of Vienna created by Höllerer and his team in cooperation with the City of Vienna provides an overview of the variety of current sharing options available in the city.