Impact of Sharing Economic Platform on Economy

The assignment provided discusses the impact of sharing economic platforms, like Camplify, on the economy. It highlights both positive and negative effects, including increased resource allocation efficiency in micro-industries, but also potentially pegging wages below subsistence levels for some laborers. The document draws from various references to support its analysis.

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ECONOMIC IMPACTS OF SHARING ECONOMY

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Table of contents
Introduction................................................................................................................................3
Impact on competition and prices..............................................................................................3
Impact on Employment opportunities........................................................................................4
Impact on the resource allocation..............................................................................................4
Impact on wages.........................................................................................................................5
Conclusion..................................................................................................................................6
Reference....................................................................................................................................7

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Introduction
Sharing economy is a model where different peers of business are connected to each
other through a single platform. These sharing economic platforms allow the sellers and the
buyers of the market to interact directly with each other without intervention of any
intermediaries. The sharing economy has gained effectiveness due to the advancement of the
digital communication. There are a number of pros and cons associated with the sharing
economy and its operation. The aim of this study is to discuss the impacts of sharing
economy considering the theories and the concepts of economics. For the analysis of the
study, this paper uses an Australian based organisation named Camplify. Camplify is an
Australian based company that connects the camp goers with caravan owners and other
camp-related service providers. In this platform, the campers transact directly with the sellers
and pay the transaction amount through the website’s payment gateway.
Impact on competition and prices
Among the number of positive and negative impacts of sharing economy, increasing
competition is the most exemplary. As the theory of economics state that perfectly
competitive market contains a lot of buyers and sellers which in turn helps to reduce the price
level in the market. According to Cheng (2016), the sharing economic platform which is used
by Camplify helps to increase the competition among the sellers of the market so that each
individual seller does not enjoy a huge market power. From the theories of perfectly
competitive market it is also known that, lack of power over prices makes the seller a price
taker rather than a price setter. For example, in the absence of Camplify, the owners of the
caravan would have charged different rentals and campers as a consumer would not have
found out how much the other caravan owners were charging at the same time. This reduction
in the competition would have increased the rentals making the customers of the market
worse off. Sundararajan (2016) commented that, prior to the digital advancement or the
operation of Camplify, the local owners of caravan enjoyed a monopoly like market where
they had the power to set the rental. However, it does not only benefit the buyers of the
market with the reduced price of the products and services, it also benefits the sellers as they
receive more requests to rent their caravans. Prior to the introduction of Camplify, the local
owners of caravans had to depend on the demands of the local campers and communication
with campers residing far away would be impossible. The sharing platform has allowed the
owners of caravan to enjoy expanded customer base. Consequently, this has also enhanced
the powers of the sellers to grow their caravan rental business as well. Zervas et al. (2017)
commented that, in the specific market of on-demand caravan, the demand is inelastic and

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using this concept the sellers have gained despite the decrease in price and the increase in
demand. However, one of the negative impacts of sharing based platform is that all the sellers
of the market know what the other sellers of the market are charging as rent. Therefore, they
can use the signalling in order to increase and control the rent of the caravans. However, this
issue is minor as the collusive behaviours can be easily detected by the administrators of the
platform.
Impact on Employment opportunities
The impacts of sharing economic platform such as Camplify on the employment
opportunities are subjective. The collaborative consumption model used in the sharing
economy, in one hand reduces the employment for some individuals, while on the other hand
creates new opportunities for the other. For example, the Camplify abolishes the presence of
the intermediaries who previously used to bring campers to the caravan owners and used to
take a chunk of money from the industry. The shared platform established by the company
now allows the caravan owners to reach out to the campers directly and hence the
intermediaries are worse off. However, Meyer and Shaheen (2017) highlighted that, Camplify
helped the owners of the caravan to convert their services into full-fledged businesses. The
immediate requirements generated by these businesses are the direct employment
opportunities generated by the sharing economy. Furthermore, the employment opportunities
are also generated through the growth of the businesses themselves. According to the growth
theories of economics, increase in the GDP reduces the unemployment. This implies that
more economic transaction leads to more employment opportunities. Martin et al. (2015)
stated that the employment opportunities through the sharing economy come from the
proliferation of transaction. As discussed above, the demand for rental caravan increases due
to the sharing economic platform introduced by Camplify. Besides this, indirect means are
also there which creates employment opportunities through the operation of the sharing
economic platform used by Camplify. These indirect channels are the car service providers
and mechanic whose demand also increases along with the use of the caravans.
Impact on the resource allocation
Resource allocation, in the literature of economics, is known as the management of
the resources in such a way that increases the productivity of the overall individual or the
organisation. Sharing economic platforms hugely influences the resource allocations of the
market. Ranchordás (2015) commented that, prior to the sharing economic platform such as
that of Camplify, middlemen used to extract more revenue than the value they generated for
the industry and the market. For example, campers before the introduction of Camplify found

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it hard to search a caravan owner who would rent them his caravan and taking the advantages
of this the middlemen used to charge a lot of money from the campers and paid the caravan
owners after taking heavy commissions. Consequently, the price level in this industry
remained very high and the overall production remained low. This also led to low level of
labour requirement and capital requirement as well. Consequently, the allocations of
resources were inefficient. However, with the sharing economic structure, resource
requirement increased with the proliferation of the transaction in the market. The sellers or
the owners of the caravan respond to the increased demand of the market by turning the
renting activities into a business attracting and investing a fairly large capital. Koopman et al.
(2014) stated that sharing economy has increased the capital investment in the lower level of
economy that has strengthened the allocation of resources in the economy. However, critics
of sharing economy pointed out that the allocation of resources creates an inequality in the
system. Heo (2016) stated that different individual gets different returns and hence inequality
sets in. For example, the labours for the maintenance of the caravans get paid same despite
the changes in the demand in the markets. In this case, only the owners of the caravans are
better off as they enjoy the gains from the trade. As a result of the income of the caravan
owners and the labours, support staff has increased after the introduction of the platform.
Impact on wages
The sharing economic platform transforms the unorganised sector into an organised
sector. Prior to the existence of Camplify, the campers interacted with the intermediaries
before getting the contact details of the caravan owners. Therefore, any kinds of transaction
that used to take place between campers and intermediaries went unproductive. Sharing
economy has helped the industry to get formalised and hence it has also impacted on the
wages of the labours as well. Martin (2016) highlighted that sharing economic platform runs
on the perfect competition which also gets reflected in the corresponding labour market as
well. Consequently, the labour markets also behave as a competitive market giving extra
power to the business owners. In this case, the caravan owners, despite making huge profits,
did not manage to have powers to control the wages of the labours. “Sharing economic
platform”, as discussed above, give rise to the number of private ventures at the lowest level
of the economy. Thus, a huge pool of employment opportunity is created through the
operation of the platform providing a standardised wage to the labours of the market.
However, one of the negative impacts of sharing the economic platform on the wage of the
labours is that in some of the sectors it fixes the wages below the subsistence level.

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Conclusion
Therefore, sharing an economic platform as used by Camplify has a number of
positive and negative impacts on the economy. One of the characteristics of these types of the
platform is that it allows the sellers and the buyers separated by large geographical area to
come under one place. Consequently, the intermediaries who generated no product for the
industry were abolished. Furthermore, the micro industries such as the caravan rental
allocated the resources inappropriately which led to low productivity of the sector. The
introduction of the sharing economic platform has allowed the resources to work at their
potential. However, despite some of the positive impacts, it has also as it pegs the wages of
some of the labours in a level lower than their subsistence wage. However, it can easily be
mapped that, the positive impacts of the sharing economic platform outweigh the negative
impacts.

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Reference
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