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Economic Explanation: From Sharecropping to the Sharing Economy

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  • Tsui Kevin K.

    (Department of Economics, Clemson University, 228 Sirinne Hall Clemson South Carolina 29634, USA)

Abstract

I examine the sharing economy using a contractual approach pioneered by Cheung (1969, The Theory of Share Tenancy: With Special Application to Asian Agriculture and the First Phase of Taiwan Land Reform. Chicago: Chicago University Press). Progress in information technology that reduces transactions costs leads to the emergence of rental contract to supersede outright ownership, especially among goods and services in which search and monitoring costs had been major trade barriers. I present evidence that ridesharing indeed significantly lowers wait times. Trust cannot explain the economic success of some sharing economy companies (e. g., Airbnb, Uber) but not others (e. g., SnapGoods). Sharing power drill, the poster child of the sharing economy, is an economic failure because the major trade barrier is transportation rather than transaction costs. Changes in transaction costs lead to changes in contractual arrangements. In the case of contractual choice between ridesharing platform and drivers, findings about drivers’ characteristics and contract details are consistent with the theory of share tenancy. My analysis also sheds light on the current debate on the employment status of driver-partners.

Suggested Citation

  • Tsui Kevin K., 2016. "Economic Explanation: From Sharecropping to the Sharing Economy," Man and the Economy, De Gruyter, vol. 3(1), pages 77-96, June.
    • Handle: RePEc:bpj:maneco:v:3:y:2016:i:1:p:77-96:n:4
    DOI: 10.1515/me-2016-0005
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    References listed on IDEAS

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    1. Cheung, Steven N S, 1983. "The Contractual Nature of the Firm," Journal of Law and Economics, University of Chicago Press, vol. 26(1), pages 1-21, April.
    2. Kendall Todd D. & Tsui Kevin, 2011. "The Economics of the Long Tail," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 11(1), pages 1-20, December.
    3. Klein, Benjamin & Crawford, Robert G & Alchian, Armen A, 1978. "Vertical Integration, Appropriable Rents, and the Competitive Contracting Process," Journal of Law and Economics, University of Chicago Press, vol. 21(2), pages 297-326, October.
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    Cited by:

    1. Dreyer, Betine & Lüdeke-Freund, Florian & Hamann, Ralph & Faccer, Kristy, 2017. "Upsides and downsides of the sharing economy: Collaborative consumption business models' stakeholder value impacts and their relationship to context," Technological Forecasting and Social Change, Elsevier, vol. 125(C), pages 87-104.
    2. Park, Hyejune & Joyner Armstrong, Cosette M., 2019. "Is money the biggest driver? Uncovering motives for engaging in online collaborative consumption retail models for apparel," Journal of Retailing and Consumer Services, Elsevier, vol. 51(C), pages 42-50.
    3. Yoonjae Bae & Jungyeon Choi & Munguljin Gantumur & Nayeon Kim, 2022. "Technology-Based Strategies for Online Secondhand Platforms Promoting Sustainable Retailing," Sustainability, MDPI, vol. 14(6), pages 1-37, March.

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    1. Економіка спільної участі in Wikipedia Ukranian
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