Banned from the sharing economy: an agent-based model of a peer-to-peer marketplace for consumer goods and services

Abstract

The emergence of profit-based online platforms related to the Sharing Economy, such as BlaBlaCar and Airbnb, provides new means for end users to create an income from their possessions. With this opportunity, participants have to make strategic economic decisions despite limited formal expertise and information. Decentralization (using digital technologies) and reputation (using user reviews) are the core mechanisms chosen by these platforms to mitigate these limitations and to work efficiently as online matchmakers. We test the performance of these two mechanisms by studying the allocative efficiency (in terms of value and volume of transactions) of simulated marketplaces under different types of motivation from the participants and control from the platforms. As a result, we find an inverted-U relationship between the decision-making leeway available to the participants and the platform’s allocative efficiency. From the participants’ perspectives, too much freedom or too many barriers lead to market failures affecting specific participants: low-end consumers are banned from the marketplace while high-end providers experience lower levels of activity. As governance advice for these platforms, we show the limitations of promoting these platforms on the sole motive of monetary rewards.

Innovations in The Institutional Modelling of The Sharing Economy

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Blockchain and institutional complexity: an extended institutional approach

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To Own or Not to Own: Costs for Car Ownership in Sharing Economy

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