Cooperatives in the Age of Sharing

Abstract

Airbnb and Uber are two outstanding examples of the sharing economy, a recently observed tendency that people are willing to share their property or to rent property instead of owning it. There is a vast literature on the prospects of the sharing economy and on the economics of platforms, which enable the sharing economy. Less research is found on the reasons for this development and on the question whether these new types of transactions require new governance frameworks. In this paper we will show, what explains the individual ownership decision and how changing preferences and changing transaction costs may lead to the sharing economy. Platforms play a crucial role in lowering the transaction costs, but they come along with new dependencies because they tend to become monopolies over time. Thus, platforms may start to exploit their dominant position at the expense of platform users. We will show that the—up to now purely fictitious—idea of a platform operated as a cooperative, i.e. a platform that is owned by its users, would significantly mitigate the users’ exploitability and reduce their dependency costs. We will distinguish different types of platform cooperatives and we will classify them according to applicability in the sharing economy.