Like Uber, But for Local Governmental Policy

The Future of Local Regulation of the “Sharing Economy”

+ Daniel Rauch, David Schleicher

Abstract

Recently, “sharing economy” firms like Uber, AirBnB and TaskRabbit have generated both huge market valuations and fierce regulatory contests in America’s cities. Incumbent firms in the taxi, hotel and other industries have pushed to stifle or ban new sharing economy entrants. Sharing firms have fought back, lobbying for freedom to operate as broadly as possible without government interference. To date, both participants and observers of these “sharing wars” have relied on an unstated assumption: local governments will either shut sharing down, or they will leave it alone.

But this assumption is almost surely wrong. If sharing firms prevail, it is unlikely that cities and states will ignore them. Instead, as sharing firms become permanent players in key urban industries, local and state governments are likely to adopt the type of mixed regulatory strategies they apply to firms with whom sharing firms share important traits, from property developers to incumbent taxi operators.

Specifically, governments will adopt some combination of the following policies in addition to insisting on consumer / incumbent protections: (1) subsidizing sharing firms to encourage expansion of services that produce public goods, generate substantial consumer surplus and/or minimize the need for excessive regulation of the property market; (2) harnessing sharing firms as a tool for redistribution; and/or (3) contracting with sharing firms to provide traditional government services. The future of sharing economy regulation will be very different from its present, and the changes will pose profound legal, political and ethical questions for our cities.

 

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Daniel Rauch is a J.D. candidate at Yale Law School.

David Schleicher is an Associate Professor at the George Mason University School of Law and an Irving S. Ribicoff Visiting Associate Professor of Law at Yale Law School.

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