How Government Can Embrace the Sharing Economy

I recently attended the Association of Municipalities Ontario (AMO) Annual Conference, at which the sharing economy was top of mind for many policymakers. While the sharing economy presents many opportunities, governments in Ontario and elsewhere have been slow to embrace it and adequately address the inevitable challenges.

What is the sharing economy?
Noah Zon, Practice Lead, Intergovernmental Economic & Social Policy at the University of Toronto’s Mowat Centre explained at the AMO Conference 2015 that the sharing economy encompasses platforms that allow consumers to buy goods and services directly from one another, rather than through traditional channels. The most well-known platforms are large scale service providers like Uber and Airbnb. However, the sharing economy extends much further, from retail services like Craigslist and Etsy to peer-to-peer finance and investment platforms like Kickstarter, to name a few. Often, this translates into decreased ownership of assets such as cars, as people opt to rent only when needed. The sharing economy is far from new, but it is certainly growing as technology continues to develop. As such, the public sector response must develop along with it.

While consumers have shown a strong interest in the sharing economy, policymakers have often been slower to the punch. However, the opportunities for government should not be underestimated. The United Kingdom, for example, has voiced its intent to become a global leader for this expanding sector. Likewise, in the United States, a bill was signed into law by Colorado Gov. John Hickenlooper authorizing ridesharing services. Similarly, a regulatory framework was approved by California’s Public Utility Commission (PUC) allowing ridesharing companies to operate statewide. With the growth of the sharing economy set to continue, other jurisdictions can follow suit. As urbanization continues, the sharing economy can foster the move toward livable and convenient communities and make the best use of public assets.

How can government embrace it?
Zon identified several ways in which government can better approach the sharing economy.

• Develop a strategic operating framework to address the sharing economy – Questions such as the impact on broader policy objectives, the scope of the underground economy, the government’s role in the market, and impacts on social programs and policies should be considered.
• Focus on transparency – Commit to providing open communication about what you’re doing and why.
• Regulate smarter – Regulatory frameworks are often outdated, having been adopted before the sharing economy took off in the digital age. Pilot programs, for example, are a great way to experiment. Letting new service providers test their businesses in your community for a given amount of time allows policymakers to shape their responses based on the actual impact.
• Modernize government structures – Today’s citizens expect speed, effectiveness, and transparency, yet government generally closely guards information, operates through closed processes and is innovation-averse. However, adapting to the sharing economy requires policy to adapt with technology, requiring government to re-examine how it can best organize itself.

What are the challenges?
Despite the robust opportunities, experts agree that governments should still tread with caution. For example, policies surrounding ridesharing should address accessibility for disabled and low income populations. Additionally, it’s impact on city planning must be considered. Zon explained that one of the largest challenges for government is balancing the interests of all relevant players, including established businesses that may feel threatened by this new way of doing business, platforms that must now be considered in public policy and consumers.

Brittany Renken is part of the GovLoop Featured Blogger program, where we feature blog posts by government voices from all across the country (and world!). To see more Featured Blogger posts, click here.