Regulation of Platforms in the Sharing Economy Regulating these

Regulation
of Platforms in the Sharing Economy

Regulating
these digital platforms can be quite difficult. Regulation is sought to protect
consumers from fierce competition, price sabotage, asymmetric information and
unequal bargaining power (Kahn, 1995). Digital platforms often find creative
ways to avoid regulation, which can have serious consequences. An example would
be the Uber, which avoids the rules for taxi drivers. An example of such a rule
is that taxi drivers have to pass a certain test, which costs money, to have a
certain taxi driver certificate in order to be allowed to be a taxi driver.
However, Uber drivers can simply register online for free, and thus making it
hard for the taxi drivers to compete with the Uber drivers, since the Uber
drivers have lower costs.

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            This is also the case for DogVacay
and their competitor; kennels. It takes several steps in order to be able to be
allowed to open a kennel. First one must contact local authorities to make sure
you are aware of all specific laws regarding pet boarding businesses. This may
not even be allowed in the specific area. Then one must contact city hall and
ask if special licensing is required on top of the business license. Thirdly,
one must make sure that the location of the kennel meets all requirements that
make sure that the pets’ needs are met (Gerard, n.d.).  Lastly, one must take out insurance in case
something were to happen to one of the pets while they are in the kennel and
under your responsibility.

            In
contrast to opening a kennel, becoming a pet sitter at DogVacay requires much
less time and money, since people simply can register online and do not need
all the specific licenses. This makes it harder for kennels to compete with
DogVacay, since once again the platform’s costs are lower.

            However,
there is a downside to the simple application of DogVacay. Even though the pet
sitters are thoroughly scanned, some incidents have occurred while pets were
with their DogVacay pet sitters. One such an incident would be the death of a
six-year-old dog called Pippen. It was staying with a dog sitter when it was
left in a hot car and eventually died of dehydration and overheating (Henry,
2017). Consequently, the pet sitter was expelled from the site and the pet
owner received $25,000 as compensation.

            This
is a great example of how regulation can protect consumers, and explains why
firms in the sharing economy may need closer regulation. However, this may not
be as easy as it may seem. Katz (2015) states that since the sharing economy’s
platforms do not fit into the existing regulatory framework and the traditional
service providers’ regulation is often localized. This creates not only conflicts
for the platforms, but also for the regulators. Authorities must quickly adapt
laws to digital platforms, because the number of digital platforms is rising
significantly the consumers must be protected.