A City View Of The Sharing Economy

The sharing economy is growing and impacting cities. Collaborative consumption feeds into, and off of, desires for immediate gratification. With “on-demand everything” the way of the present and future, the need for comprehensive and accurate data is paramount.

Service efficiency and on-demand information are the primary game changers. City leaders are open to integrating sharing economy services more fully within their communities – and they want to capitalize on this opportunity. The ongoing safety and regulatory concerns that have arisen are still significant, though, and policies continue to change and adapt in cities nationwide.

The National League of Cities’ City Survey on the Sharing Economy: Shifting Perceptions of Collaborative Consumption identified three key benefits and concerns expressed by city leaders as they seek to embrace the sharing economy.

When city leaders were asked to identify the greatest benefit sharing economy businesses offer their communities, 22 percent of respondents identified improved services, 20 percent identified increased economic activity, and 16 percent identified increased entrepreneurial activity. On the whole, cities want to encourage economic development and accommodate the services that their constituents want.

At the same time, our survey found that cities do have concerns with the sharing economy. The issue of greatest concern was, by a large margin, public safety, and specifically the lack of comparable insurance coupled with general safety concerns cited by 61 percent of respondents. Cities also identified as primary concerns the protection of traditional service providers and industry participants (10 percent) and non-compliance with current standards (9 percent).

Ongoing national headlines have touched on many of these benefits and concerns, and we can affirm that our data supports this general sentiment. Additionally, it parallels conversations that we have had with cities about the value and challenges they see related to the sharing economy.

In our previous work, we held in-depth interviews with city leaders and performed a sentiment analysis on large cities throughout America. However, this survey data allows for a more precise indication of where cities currently stand on issues surrounding the sharing economy, and how they plan to address those issues.

There is no doubt that cities make the sharing economy work. However, acting as the catalyst for these new business models is no small feat for cities to accomplish, so sharing economy companies need to work together with communities to ensure that sharing economy services benefit all involved.

The complicated nature of these new business relationships is compounded by the speed of their development. The sharing economy trend has been explosive, with many companies establishing themselves in cities seemingly overnight.

Five years ago, these companies existed in only a handful of cities, and they certainly did not enjoy the mainstream recognition and financial cachet that they do today. Once classified as startups, Uber and Airbnb alone are now valued at over $50 billion. This growth is noted by cities and reflected on the ground. 55 percent of cities surveyed reported some growth in the sharing economy, and 16 percent classified it as rapid growth.

While the sharing economy encompasses much more than transportation and short-term rentals, city leaders are most prominently noticing these types of services. Our survey numbers reflect this, with 53 percent of cities reporting growth in ridesharing and 46 percent reporting growth in homesharing.

While cities want to welcome these new service providers, the variation among the types of peer-to-peer services available to consumers makes it complicated for cities to give these services carte blanche to operate. Cities sometimes have mixed feelings regarding different types of sharing economy companies. Sixty-six percent of the cities in our survey indicated that their local government is supportive of ridesharing, while only 44 percent indicated that their local government is supportive of homesharing.

This likely reflects the specific policy implications and priorities that apply to certain areas of service. However, when asked whether they supported sharing economy growth in general, nearly 71 percent of cities responded affirmatively. In short, cities support the idea of the sharing economy, but certain types of businesses bring unique concerns and considerations.

Cities are working through these challenges because they want to reflect resident wants and needs. That said, the development of policies and processes for embracing sharing economy services, and the underlying values that support this development, vary from city to city. The majority of respondents acknowledged the importance of developing new policies on the sharing economy, and placed ridesharing front and center as the top priority in the policy arena.

The policy questions on the sharing economy will take time to be fully solved, but every day new benefits and concerns surrounding the sharing economy emerge. What we’ve learned is that the sharing economy offers great promise for cities. And, city leaders are well prepared to successfully navigate the ever-changing developments that continue to change the course of our shared urban environments.