The Sharing Economy Model

Everyday we are bombarded with terms like the gig economy, the on-demand economy, the freelance economy, the sharing economy and many more. These terms attempt to describe the new way of doing business, taking up tasks or jobs – full-time or part-time. Is there, however, a difference between them? What do these terms entail? In this Babel of terms, the AppJobs Institute is here to shed some light on all of these terms, starting with the concept of the sharing economy. 

Why is the sharing economy considered a controversial term?

Let’s start with a definition: the sharing economy operates with a “focus on the sharing of underutilised assets, monetised or not, in ways that improve efficiency, sustainability and community.”

A perfect example of this kind of economy would be Airbnb – individuals share their homes with other people, all the while making a profit out of something that is considered an “underutilised asset” (a spare room, a sofa, an apartment).

The confusion starts when the term “sharing economy” is also used to describe economic activity involving any kind of online transactions that are not only peer-to-peer but also B2B. The term then broadens and becomes misleading, claim many.

Uber is an example of this phenomenon. The company would usually be considered under the sharing economy category, but is it ridesharing when a person leases a car to drive people around? S/he is not using an “underutilised asset” (his/her own car in this case) to make money. UberPOOL, on the other hand, that matches riders heading in the same direction with drivers, so that they can share the ride and cost, is a more representative example of the “sharing economy”.

Nevertheless, the term “sharing economy” is used in its broader sense by people and in the media. It might be considered as misleading, but we should not forget that the sharing economy, as well as the freelance economy and the on-demand economy etc. are fairly new concepts.

Therefore, time will decide what they will end up meaning and which terms will prevail or change. After all, we live in a time of rapid advancement thanks to development of technology, and sometimes language fail to keep up with this fast a pace.

The rapid growth of the sharing economy and the reasons behind

Due to the ambivalence regarding what the sharing economy encompasses, it may be hard to identify its growth. A 2014 research by PWC, looking into five sectors of the sharing economy (travel, car sharing, finance, staffing and streaming), found that the global spending was $15 billion at the time and was predicted to reach $335 billion by 2025. This growth is considered substantial.

The main reason behind the growth of the sharing economy is the development of information technology and digital media – new technologies that are mainstream and enable businesses and ordinary people to transact digitally. Then, because of social media, people tend to be influenced more by their peers for their purchasing decisions and are oriented towards smarter solutions that will bring them financial gain.

Moreover, the fact that most people live close to each other in urban areas is an enabling factor for the sharing economy to thrive, as enough customers and service providers are close to each other and thus, can transact easily

The benefits of the sharing economy

What is the impact does the sharing economy have on people’s lives? An unmistakable impact is the increased trust among members of the society. Without trust, the sharing economy cannot operate. And this, in turn, results in strengthened communities. Additionally, it gives many people the opportunity to have flexible ways of making money, live better and juggle personal life and work better, while offering more business opportunities to entrepreneurs.

Not to mention the reduction the of need for certain goods and the subsequent positive impact on the environment. Last but not least, the quality of provided services and/or goods increases: as the sharing economy relies very much on ratings, who would want to get bad reviews?


Grasping the term “sharing economy” is not the easiest task, because there exists no consensus in how and when it should be used. Furthermore, the lack of clarity in its description makes it difficult to mark the boundaries and to interpret what the term exactly entails. The real definition is mostly likely to become clearer in time.

This is crucial for all stakeholders – users, workers, service-providing platforms. Perhaps most importantly for the governments too, so that there develops common ground for debates and decisions regarding the vital aspects of this new economy: rules and regulations, laws, working rights and obligations, insurance benefits, healthcare issues etc.