There has been a boom in what has been termed the “sharing economy.” 1 This business model often taps into millennials’ increased need for flexibility as well as a generational shift from ownership to access.2 Sharing companies thrive on their decreased reliance on human capital and infrastructure; they make use of underutilized resources and innovative technologies in order to lower transaction costs. 3 Often considered “disruptors” of older businesses, these companies strategically challenge the status quo for their own and their users’ benefits. Their business “disruptions” sometimes also involve the violation or evasion of existing legal statutes and ordinances deemed negligible, inapplicable, inefficient, or outdated. Cities and municipalities throughout the United States have struggled with how to best address these challenges. Central to this new wave of peer-‐to-‐peer marketing platforms are short-‐term rental (STR) websites such as Airbnb, VRBO, and HomeAway. Building upon predecessors such as eBay and Craigslist, online STR platforms similarly facilitate transactions in a rapidly expanding market: individuals willing to rent part or all of their homes and travelers in need of short-‐term housing. Through these STR platforms, “operators” or “hosts” can advertise spaces ranging from a living room couch to large multi-‐room estates. Travelers have additional rental options at different price points beyond what is available from traditional hotels and motels. In exchange for this service, some STR platforms such as Airbnb charge both hosts and travelers fees for each interaction. Airbnb’s dominance both in terms of market share and brand recognition has led to its being set as a standard for the STR industry overall. This rapid growth and dominance, however, has caused contention. The large market share held by Airbnb places the company at the center of much of the regulatory debate.
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This chapter is based on an Advanced Policy Project (APP) for the degree of Master of Public Policy at the UCLA Luskin School of Public Affairs. 2 Vincent Trivett, “What the Sharing Economy Means to the Future of Travel.” (2013), http://skift.com/wp-‐ content/uploads/2014/07/skift-‐what-‐the-‐sharing-‐economy-‐means-‐to-‐the-‐future-‐of-‐travel.pdf. 3 Darcy Allen and Chris Berg, “The Sharing Economy: How Over-‐Regulation Could Destroy an Economic Revolution,” (2014), http://ipa.org.au/portal/uploads/Sharing_Economy_Media_Release_December_2014.pdf.
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