Read the article: “Airbnb and the Unstoppable Rise of the Share Economy (Links t

Question

Read the article: “Airbnb and the Unstoppable Rise of the Share Economy (Links to an external site.)Links to an external site.”. A recent trend in the consumer marketplace is the ability for a consumer to share their personal belongings, such as their homes/apartments, autos, tools, bicycles, and so forth. The shared economy has now become a multibillion dollar business.

Explain how this concept is disrupting our traditional economy.

Describe whether the shared economy is creating new value for the consumer or if it is just replacing existing business.

Explanation / Answer

Shared Economy - Shared economy is defined the economy in which assets of one individual is being used/shared to other individual, when it is not in use. This helps the individuals to utilize their existing assets when they are not in use or when they are out of stations. Ex, When John is out of station for a period of two month's time, his can be allowed to use by Tom, who wants a car for some time of his stay at the town. This helps people to exchange their assets, which in general improves the utilization of assets and avoid the holding of the assets. This is new trend of business, expanding very fast in the market. Though assets sharing was a old and historic economy option, but internet made it more user friendly. The shared business is now a multibillion dollar business in the world.

Shared Economy disturbing the Traditional Economy –

Traditional economy is basically people use to buy the assets as per their need and requirement of the assets for their personal use. They use to keep the asset for long time they use it as and when they needed the asset.

With the start of the shared economy, the requirement of traditional economy is getting reduced , as the total asset requirement is being balance out by the shared asset option. For example take initially the asset purchase requirement was for 100 numbers, then 100 number of asset purchase were made and the economy get the chance to sell the 100 numbers of assets. Now with the entry of shared economy, let 20 cases are being managed with the shared economy then the remaining cases which under go for traditional economy will be 80 cases, hence it reduced the traditional cases from 100 to 80 number due to arrival of shared economy.

Shared Economy is helping in two ways as below

Shared Economy increases the economy – The shared economy not only reduces the traditional economy, but in other perspective, it also increases the economy. Take a example The asset purchase is very difficult and not easy for each and every person. So only some / limted people will plan for the purchase of the assets for their uses. But the poor people will not be able to purchase the assets, so they do have the demand , but due to resources unavailability, they could not be able to make it happen and add the increase in the economy. But with shared economy, the poor people can also explore to complete their requirement by sharing the assets @ low cost as compared to initial cost of asset purchase. Hence the shared economy not only reduces the traditional economy, but it also improves the economy by developing the needs/ requirement in the middle/poor people. Hence the shared economy not only reduces the traditional economy but it also improves the economy.   

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