Social Implications Of Covid-19 On The Sharing Economy

The late 2019 outbreak of the COVID-19 pandemic, among many consequences, has put a serious strain on many sectors of the economy, causing GDP in numerous countries to plummet. Among the different business fields which have suffered, is a fairly new one – the sharing economy. The sharing economy is different from traditional economies since it is less regulated; it’s based on a two-sided rating system which serves as a confidence-building mechanism between the customer and the service provider. Additionally, this kind of economy, in most cases, demands physical interaction between both parties. This interaction between individuals is the reason COVID-19 is still posing a major threat globally but at the same time it is crucial for the sharing economy to survive. This paper discusses the challenges to the sharing economy caused by COVID-19, and provides an in-depth look into the aspect of regulation versus the sharing economy’s non-traditional confidence-building mechanism - its ratings system. By analyzing the two most popular sharing economy representatives Airbnb (hospitality) and Uber (individual transportation), this paper gives evidence to how fragile the underlying business foundations of these successful companies are and also provides evidence for these unstable trust-based economy schemes.