The effects of Sharing Economy

4. effects of Sharing economy

 

1) The impacts of shared economy on existing industries

 

-The real estate and lodging industries
It is a change in the lodging and real estate industries caused by housing-sharing companies such as Airbnb. In early 2016, Dutch bank ENG analyzed that Airbnb had a "significant" impact on raising apartment prices by generating profits from short-term leases in apartments. According to the British daily Independent, the city of Berlin reported a 56 percent jump in rent in 2014 from 2009. In Paris, the income from short-term leases was two to three times higher than that of residential rentals, and 20,000 houses disappeared from the general rental market due to the brisk short-term rental business, causing cracks in the balance between supply and demand of state housing. As a result, the British daily Guardian recently named Airbnb as the main culprit of gentrification[1], where the city's indigenous people cannot afford to pay for the high real estate prices.[2] This is a case in point that shows the changes in the real estate market brought by Airbnb. Also, the New York lodging industry's estimated direct and indirect losses from Airbnb during the first year of August 2014-15 are $2.1 billion. Airbnb's hotel market erosion estimated 4,000 jobs to be lost from the hotel, with direct and indirect economic losses totaling nearly $700 million.[3] Existing hotels are changing in response to these changes by collaborating with shared economy companies[4], investing in home-sharing businesses, mergers and acquisitions, hotel differentiation and introducing advanced information technology.[5] 

 

-Automobile
The second is the automobile industry. We will explore the impact of car-sharing services such as Uber and Grab's ride-sharing platform and Socar on the existing automobile and taxi industries. First of all, I will pay attention to the automobile production industry It predicts that car production will decrease because existing cars are shared by multiple people. This is wrong, however, as a result of the overall increase in mileage and reduction in replacement cycles, there will be an increase in car and tire sales, and a decrease in demand for A/S components due to a decrease in the number of vehicles driven. In addition, the increase in corporate leasing sales is expected to increase financial services and benefit parking lot businesses as well.[6] Next is the taxi industry. With the advent of Uber, the taxi industry is noisy. It is a very interesting result, contrary to public concerns that a shared economy will reduce employment. "After Uber was introduced between 2010 and 2012, the supply of corporate taxis increased about 8 percent and that of personal taxis, including Uber, increased about 45 percent," said Martin School researchers at Oxford University in a recent paper. This means that the taxi industry has grown in size and jobs have increased. However, the researchers added, "The impact of the introduction of Uber has resulted in a slight decrease in the hourly wage of taxi drivers paid by the company," adding that it can be seen as a reaction to the increased income of Uber drivers.[7] Uber has had a negative impact on taxi operators rather than taxi drivers. Uber's arrival has reduced the number of taxi use and reduced private payments as taxi drivers lease private cars and switch to Uber drivers, making it difficult to run the company. 

 

-Insurance business
The third is the insurance business. The shared economy that shakes the concept of producers and consumers has a significant impact on the business process of the casualty insurance industry, including product development, sales channel, underlining, price calculation and claims for insurance. It is necessary to establish a new agreement that conforms to the characteristics of the shared economy, and redefine the boundaries between the ambiguous producers and consumers. If a personal vehicle is driven and driven by an app such as Uber or Grab, it is not covered by personal insurance and should be covered by a separate commercial insurance policy. Accordingly, GEICO[8], MetLife Auto and Home, and Farmers are selling insurance products for ride-sharing drivers. GEICO sells hybrid insurance products, a combination of personal and ride-sharing insurance, that guarantee a personal vehicle as much time as it needs before it can be accessed and shut down. MetroMile[9] also released Uber-only products.[10] As such, derivatives of insurance are emerging as a result, as more and more shared-economy companies are already considered to replace the industry.

 

-Future vision

Companies based on a shared economy are emerging, affecting existing industries. There are concerns that a shared economy will change the existing industrial ecosystem and reduce the size of the economic system. In fact, the shared economy is affecting in many ways as it conflicts with the production methods, economy-related systems and regulations of products that economic players have long used as the norm. On the other hand, replacing the ineffectiveness of existing firms increases efficiency, making the new economic system more likely to be developed against the existing market. By increasing the economic value of idle resources, we can shift to a paradigm that develops the interests of society as a whole.

 

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[1] Gentrification : This refers to the phenomenon in which backward old urban centers are activated to replace existing low-income aborigines by bringing in more than middle-class classes.

[2] Effects of the Shared Economy on the Real Estate Market and Policy Responses, Yang Hee Dong

[3] HVS Consulting & Valuation Division of TS Worldwide, “Airbnb and Impacts on the New York City Loading Market and Economy”

[4] As the success of AirBnb threatened the existing hotel industry, LiquidSpace (Online Booking Service) emerged to provide a shared service on the hotel's lobby and meeting rooms, while increasing the sales of existing hotels - Hana Financial Management Institute CEO Hana Management Information No. 10 Dec. 15, 2015

[5] “The Economy of Chosun”, no181, 2016.12

[6] “Sharing Service- Impacts on the automotive industry”, Lee Seung Jae, Heungkuk Securities Research Center

[7] "Shared economy is reducing employment..." "It has increased since Uber was introduced.” Yeonhap News, 2017.02.13

[8] The Government Employees Insurance Company ( GEICO ) is an American auto insurance company

[9] MetLife Auto and Home, Farmers, MetroMile : American auto insurance company

[10] "The Impact of the Shared Economy on the Loss Insurance Industry," Lee Sun-joo, a researcher at the institute, KiRi Weekly 2016.05.16