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SHARING ECONOMY, REGULATORY ARBITRAGE, AND URBAN GOVERNANCE: HOW CITY SPACE SHAPES ECONOMIC GROWTH AND INNOVATION.

1. Introduction

The sharing economy is flourishing by reintegrating assets and individuals in a determinedly deep-rooted, place-based manner (Barros-Del Rio, 2016; Havu, 2017; Mihaila, Popescu, and Nica, 2016; Popescu et al., 2018) and by supplying groundbreaking solutions to the demandings of life in populous urban regions. Trust mechanisms that are essential to sharing economy platforms produce value by taking actions to certain urban circumstances of crowded, mass indistinctness. Regulatory conditions may confine or alter the provision of urban amenities, shaping the additional capacity that sharing economy companies capitalize on to satisfy demand for services like ride sharing and alternative housings. (Davidson and Infranca, 2016)

2. Literature Review

Sharing companies have identified ways to step on current local regulatory incongruities and hindrances to entry brought about by local law, generating the chance for regulatory arbitrage, because such enterprises establish and organize their activities to bypass local regulation. Such endeavors give rise to frictions (Andrei et al., 2016a, b; Gava, 2016; Michailidou, 2017; Nica, Potcovaru, and Mirica (Dumitrescu), 2017; Popescu et al., 2017a, b, c), as sharing-economy competitors are in conflict with incumbent suppliers at the local level. The concentration and physical closeness that further thick markets for sharing firms indicate that any adverse spillovers are intensified locally. Sharing platforms, by building up utilization of present resources and unraveling additional capacity, may generate concerted, bounded externalities, by swiftly expanded in urban regions. As sharing enterprises are disorganizing established segments of urban economies (Esty, 2017; Life, 2017; Nica, 2015; Popescu and Alpopi, 2017), regulatory arbitrage has been extremely adequate. (Davidson and Infranca, 2016)

3. Methodology

Using data from Pew Research Center, I performed analyses and made estimates regarding the debate over the legality of home-sharing services, U.S. users' views of ride-hailing services, and U.S. individuals who expect these services to play a role in managing the customer experience. Empirical and secondary data are used to support the claim that the numerous well-resourced disputes that sharing economy companies are having with city governments have established the conditions of the sharing economy and have altered the character of local government regulation.

4. Results and Discussion

Local governments ask that sharing-economy companies make data concerning their operations public and adhere to current regulations. Insofar as sharing economy companies constrain local governments in the direction of more information-driven policymaking, such endeavors may harmonize demands for superior regulatory unambiguousness by local citizens. As a result of the swiftly unstable underlying forces of the sharing economy and the substantial information it brings about (Bratu, 2016a, b; Holzer, 2017; Mihaila, 2017; Peters, 2017; Teubner, Hawlitschek, and Dann, 2017), cities may examine and alter regulatory reactions taking into account novel data. Grasping the sharing economy as a city phenomenon involves local governments to more comprehensively normalize it (Dusmanescu et al., 2016; Lazaroiu et al., 2017; Nica et al., 2014; Popescu, 2014) and to reflect on how the substantial information it brings about may facilitate more precisely adjusted reactions to its concentrated consequences. The sharing economy has been defined and enhanced through the apportioned disharmonies of local regulatory arrangements, but it is also remodeling cities themselves, by creating novel patterns of local governance and political involvement and by modifying models of advancement and mobility. (Davidson and Infranca, 2016) (Figures 1-6)
Figure 1 The debate over the legality of home-sharing services

Percent in each group who have heard... about the debate over whether
or not homeowners should be able to legally rent out their homes using
services like Airbnb, VRBO or HomeAway

                    A lot  A little  Nothing at all  Have not heard of
                                                     home-sharing site

All adults           7%    15%       23%             52%
Home-sharing users  18     36        44

Sources: Pew Research Center; my survey among 2,400 individuals
conducted October 2017.

Note: Table made from bar graph.

Figure 2 Both users and nonusers strongly support the legality of
home-sharing services and feel that homeowners using them should not
have to pay taxes in order to use them

Among individuals who have heard about this debate, percent who say
these services should be...

                    Legal but have  Legal but should not  Not legal
                    to pay taxes    have to pay taxes

All adults                32%             51%                3%
Home-sharing users        30              57                 1

                       Not sure

All adults               15%
Home-sharing users       12

Sources: Pew Research Center; my survey among 2,400 individuals
conducted October 2017.

Note: Table made from bar graph.

Figure 3 U.S. individuals expect these services to play a role in
managing the customer experience

Percent of ride-hailing users who think... is/are responsible for
ensuring the following aspects of service are achieved

                            Individual drivers  App or service

Ensuring that drivers are        10%                 25%
properly trained
Ensuring that vehicles are       25                  14
clean and safe

                             Both the driver and the app or service

Ensuring that drivers are                    65%
properly trained
Ensuring that vehicles are                   61
clean and safe

Sources: Pew Research Center; my survey among 2,400 individuals
conducted October 2017.

Note: Table made from bar graph.

Figure 4 Both conservative, liberal home-sharing users feel that owners
should not have to pay taxes to use these services

Percent of U.S. home-sharing users in each group who feel that owners
should/should not be required to pay hotel or occupancy taxes to use
these services

               Pay taxes   Not pay taxes

Rep/Lean Rep      19%         73%
Dem/Lean Dem      39          53
Conservative      19          67
Liberal           35          55

Sources: Pew Research Center; my survey among 2,400 individuals
conducted October 2017.

Note: Table made from bar graph.

Figure 5 Home-sharing users view these services as good for people
traveling as groups, homeowners looking for extra income Percent of
U.S. home-sharing users who feel that the following statements describe
these services well or not

                                  No    Yes

Good option for families or
others who travel as a group       6%   86%
Good way for homeowners
to earn extra income               2    84
Less expensive than a hotel       13    74
Best for adventurous travelers    23    54
Located in neighborhoods
where it's hard to find hotels    21    52
Not always as appealing as
described online                  27    43
Are risky to use                  56    16

Sources: Pew Research Center; my survey among 2,400 individuals
conducted October 2017.

Note: Table made from bar graph.

Figure 6 U.S. users' views of ride-hailing services

Percent of ride-hailing users who feel that the following statements
describe these services well or not

                                       No       Yes

Save users time and stress              2%      87%
Good jobs for those who want
flexible work hours                     4       79
Good option for older adults with
limited mobility                        6       73
Use drivers you feel safe riding with   3       71
Less expensive than a taxi             13       69
More reliable than taxi or
public transit                         15       61
Good option for people who have
trouble hailing cabs                    8       55
Serve neighborhoods taxis won't visit   8       49
Used by people who have plenty of
transit options                        22       44
Good way for children to get
around safely                          25       35
Collect too much personal info
about users                            49       12

Sources: Pew Research Center; my survey among 2,400 individuals
conducted October 2017.
Note: Don't know responses not shown.

Note: Table made from bar graph.


5. Conclusions

Numerous sharing economy firms have thriven via a type of regulatory arbitrage that exploits local administrative challenges. The numerous well-resourced disputes that sharing economy companies are having with city governments have established the conditions of the sharing economy and have altered the character of local government regulation (Buchely, 2016; Lazaroiu, 2017; Moser, 2017; Popescu Ljungholm, 2017a, b; Zogning, 2017) in these essential manners: (i) insofar as the sharing economy flourishes by exploiting the current regulation, it is constraining local governments to more markedly convey and adjust their administrative aims; (ii) local governments are attempting to incorporate register sharing-economy companies in this mechanism by acquiring the massive information such enterprises own; and (iii) the sharing economy, by carrying out particular confined regulations more relevant for local citizens, may have spillover consequences bringing about raised requirements of unambiguousness for local government regulation. (Davidson and Infranca, 2016)

Author Contributions

The author confirms being the sole contributor of this work and approved it for publication.

Conflict of Interest Statement

The author declares that the research was conducted in the absence of any commercial or financial relationships that could be construed as a potential conflict of interest.

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DOINA POPESCU LJUNGHOLM

dopopescu@yahoo.com

University of Pitesti

Received 27 January 2018 * Received in revised form 18 March 2018

Accepted 25 March 2018 * Available online 29 March 2018

doi:10.22381/GHIR10120189
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Author:Ljungholm, Doina Popescu
Publication:Geopolitics, History, and International Relations
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Geographic Code:1USA
Date:Jun 1, 2018
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