[Public Voices] The Sharing Economy Undergoing Trial and Error for Coexistence with Traditional Industries

The sharing economy has brought innovation to various industries. As the market's focus shifted from suppliers to consumers, new business models emerged, creating more opportunities. The sharing economy is no longer a new concept but an essential element when discussing business models. Recently, regulations on these innovative business models have been strengthened worldwide.

For example, New York City in the United States recently implemented a policy requiring hosts on one of the representative accommodation-sharing platforms, Airbnb, to register their personal information with the city if they rent out their homes for less than 30 days, and based on this, additional taxes are imposed. New York City cited the spread of short-term rentals due to overtourism as a major reason for tightening regulations, along with social issues such as housing shortages, rising housing prices, and deterioration of residential environments. In fact, studies show that the increase in short-term rentals and Airbnb registrations raises the rents and prices of nearby homes.

Shortly after the regulation was strengthened, the number of Airbnb registrations in New York City significantly decreased, but it remains to be seen whether housing supply will increase and rents will fall as intended by the regulation. What requires more attention is how the positive effects of Airbnb's introduction are affected by the strengthened regulations.

Sharing economy services like Airbnb and Uber have had various positive social impacts.

For example, when many people travel together, they can rent an entire house, so they do not need to book multiple hotel rooms. This has positive effects such as attracting tourists and revitalizing the local economy. Contrary to our intuition, research also shows that Airbnb's introduction is negatively correlated with complaints about noise. Additionally, considering the ratio of Airbnb listings to the total number of houses, it is still uncertain whether Airbnb regulations will have a significant impact on housing supply.

Innovation does not always have only positive aspects. However, this is not to argue whether regulations on such innovations are right or wrong. Rather, when new innovations arise, it is necessary to comprehensively understand their economic and social pros and cons and, if possible, make efforts to minimize problems. As the sharing economy succeeds and grows, conflicts with existing industries are inevitable. However, flexible regulations that alleviate conflicts and enable coexistence are needed rather than strong regulations favoring one side.

It is difficult to view the strengthening of regulations on sharing economy services as a failure or regression of the sharing economy in the long term. Overseas, after the sharing economy has already been activated, data has been accumulated, and based on this, regulations are being strengthened. How long these strengthened regulations will last depends on the outcomes, but ultimately, it seems to be a process of finding regulatory measures that reduce conflicts between sharing economy services and existing services and allow coexistence.

In contrast, in Korea, various regulations still act as obstacles blocking the activation of the sharing economy. Discussions on deregulation are ongoing, but practical changes are needed. It is not yet too late or behind to reverse the situation. It is urgent for Korea to quickly create a virtuous cycle where innovative business models coexist and new business models can be derived.

Yunseok Son, Professor at the University of Notre Dame