Advantages and Disadvantages of the Collaborative Economy and Consumption

There is no doubt that the sharing economy and consumption have led to changes in the consumption patterns of a good number of people. Next, we analyze the advantages and disadvantages that this type of initiative can represent.

Collaborative consumption consists of a recent consumption model or habit in which new technologies take on special relevance. It is difficult to find an area that does not have a platform that facilitates or favors contact between people interested in offering or receiving some type of good or service: housing, transport, crowdfunding, time banks, tourism, consumer cooperatives , ...

Given the rise of this type of economy or consumption, the following are the advantages and disadvantages that, a priori, the use of these initiatives may entail:

Advantage.

As a general rule, the most immediate advantage may be the savings it implies, since, usually, more advantageous prices are obtained than in the case of the traditional economy or consumption. In addition to sharing a good, the cost of using that good is shared.
Normally the assets that are shared are continuously used, and therefore the available resources are optimized. Goods or services that remain unused on a regular basis, are shared, rented, loaned or exchanged, from people who own them to people who want or need to use them without owning them.
It is a more ecological and sustainable system than the traditional consumption model. This has environmental benefits (for example, if you share a car, fewer pollutants will be released into the atmosphere than if each person uses their private car).
Consumers can enjoy a greater number of possibilities for goods and services, by reducing the economic access barrier.
It is a system that generates trust, since, on many occasions, you get to know the person who provides the service. In addition, the comments or criticisms received by the people who offer the service can regulate its good functioning or its credibility.
Especially in this time of crisis in which there is a high unemployment rate, the collaborative economy opens up as an unbeatable opportunity for the performance of a certain activity (for example, creating new platforms that make it possible to offer goods or services under the umbrella of economy or collaborative consumption).

Disadvantages.

The collaborative economy as a whole is based on the existence of a multitude of platforms, increasingly in number, dedicated to very diverse areas. That is why its evolution is very fast and, therefore, it is possible that many of the functionalities and benefits of these platforms are unknown.
The wide spectrum of collaborative economy platforms that exist (and that will be created in the future) makes their regulatory regulation especially difficult, which is why, in principle, they could escape regulatory control. This could be wielded by the traditional platforms of the economy and consumption, because they are not required to have the same limitations or assessed requirements as they are (for example, not paying certain taxes).
Lack of protection for the consumer. The lack of regulation of many aspects of this economy or collaborative consumption, can mean that the consumer is not covered by the protection regime granted by the current regulations on consumption (for example, when sharing a vehicle, if any user of the same had a problem, it would not be covered by the regulations for the protection of consumers).

What are the economy and collaborative consumption?

The concepts of collaborative economy in general, and of collaborative consumption in particular, have recently become increasingly important from an economic, social and cultural point of view, and are introducing new patterns of consumption among the population.

Collaborative Economy

The concept of Sharing Economy is based on the exchange between individuals of goods and services that remained unused or with little use in exchange for a compensation agreed between both parties.

The growing proliferation of this type of economy should be interpreted as the result of a situation influenced by multiple factors:

Economical. Derived fundamentally from the financial crisis in which world society is immersed.
Technological. Derived from the presence of the Internet, social networks, smart mobile devices and applications for said devices, which have led to the emergence of new consumption models. An essential characteristic of technology is that its evolution is continuous and unstoppable.
Cultural. Derived from the emergence of a new culture based on sustainability to the detriment of a culture based on excessive and irrational consumerism.
Environmental. Intimately related to the above factors. The collaborative economy and, in particular, collaborative consumption, represent consumption that exhausts the use of goods until the end of their useful life, compared to traditional consumption that discards them before they have finished.

The new model of service provision that opens with the collaborative economy finds in the development of the new Information and Communication Technologies (ICT) the determining milestones for its application, being its main characteristics:

The use of the Internet as the main means to connect the supply and demand of products and services.
The use of virtual platforms that allows a great management capacity immediately and at low cost.
The use of mobile devices as a means of access to the aforementioned platforms.

They are key concepts when it comes to understanding the collaborative economy: collaborative consumption and open knowledge.

Collaborative Consumption

Expression that is framed within the collaborative economy and that, in essence, is based on sharing or exchanging goods or services using the great public showcase that the Internet represents.

Digital platforms have allowed that, in contrast to traditional forms of consumption based on disposable consumerism, new consumption patterns have emerged based on the free and non-profit sharing of certain goods or services. On the other hand, for-profit platforms have also emerged that manage certain services and that see collaborative consumption as a business opportunity. In these cases, the company acts as a meeting between supply and demand.

Faced with a culture of use and throw away (closely related to the phenomenon of programmed obsolescence of products, by which they become unusable prematurely, and even what has been called perceived obsolescence by which they make us believe that a certain product has become obsolete); The culture of sharing products and goods arises, which favors their optimization of use and facilitates access to certain people who, otherwise, would not have the opportunity to do so. This new culture uses digital technologies (Internet, social networks, smart mobile devices and their applications).

Therefore, very varied initiatives appear, such as: crowdfunding; consumer groups and consumer cooperatives; time or knowledge banks; hosting platforms; collaborative mobility platforms, and a long etc.

Open knowledge

Another important pillar within the collaborative economy is known as open knowledge, as a collaborative initiative that promotes the open dissemination of knowledge and the possibility of its reuse and distribution without legal, social or technological obstacles.

The most representative case in this sense is Wikipedia , an encyclopedia in the collaborative and free network (both to publish in it, and for use and consultation).

Main effects of the new models of use of goods and provision of services

More information available to the consumer on the good or service to be consumed. A better comparison of similar products and better decision making is possible.
Elimination of entities or intermediaries between the offer and the person who demands it, which entails a reduction in costs and an increase in competitiveness.
Increase in the quantity and variety of the offer.
More specialized services are allowed and greater freedom of choice is provided.
It improves the competitiveness and efficiency of the economy since it facilitates a greater use of resources, which also brings benefits for the environment.
There is a regulatory gap in some of the areas of the collaborative economy, which are regulated for the traditional economy sectors. This lack of regulatory requirements can lead to lower prices for services offered through the sharing economy, which can provide a competitive advantage over conventional economic models.