Sharing Economy

AAA

DEFINITION of 'Sharing Economy'

An economic model in which individuals are able to borrow or rent assets owned by someone else. The sharing economy model is most likely to be used when the price of a particular asset is high and the asset is not fully utilized all the time.

INVESTOPEDIA EXPLAINS 'Sharing Economy'

Communities of people have shared the use of assets for thousands of years, but the advent of the Internet has made it easier for asset owners and those seeking to use those assets to find each other. This sort of lending is sometimes referred to as a peer-to-peer (P2P) rental market.

Sharing economies allow individuals and groups to make money from underused assets. In this way, physical assets are shared as services. For example, a car owner may allow someone to rent out her vehicle while she is not using it, or a condo owner may rent out his condo while he’s on vacation.

Criticism of the sharing economy often involves regulatory uncertainty. Businesses offering rental services are often regulated by federal, state or local authorities; unlicensed individuals offering rental services may not be following these regulations or paying the associated costs, giving them an "unfair" advantage that enables them to charge lower prices.

RELATED TERMS
  1. Accessory Dwelling Unit (ADU)

    A legal and regulatory term for a secondary house or apartment ...
  2. Residential Rental Property

    A type of property that derives more than 80% of its revenue ...
  3. Fair Housing Act

    This law (Title VIII of the Civil Rights Act of 1968) forbids ...
  4. Construction Loan

    A short-term loan used to finance the building of a home or another ...
  5. Mobile First Strategy

    Mobile first strategy is trend in website development where designing ...
  6. Gentrification

    Gentrification refers to when a neighborhood or city undergoes ...
RELATED FAQS
  1. How much of the global economy is comprised of the real estate sector?

    The commercial and residential real estate industry generated an estimated $3 trillion in 2014, with some 35% of sector revenue ... Read Full Answer >>
  2. What is the process for a building owner depreciating leasehold improvements in a ...

    As long as the building owner is the person or entity that provides leasehold improvements, then the owner can depreciate ... Read Full Answer >>
  3. How can I invest in tax liens?

    An individual can invest in tax liens by identifying available liens and then participating in auctions where property tax ... Read Full Answer >>
  4. What is the difference between a lien and an encumbrance?

    A lien represents a monetary claim levied against property to secure payment of an obligation of the property owner, while ... Read Full Answer >>
  5. What key requirements must be met for the IRS to classify changes or alterations ...

    Qualified leasehold improvement refers to improvement that is done to the interior of a non-residential building by a person ... Read Full Answer >>
  6. How do taxes impact Net Operating Income (NOI)?

    Net operating income (NOI) is a before-tax figure and does not take into account income taxes, loan payments, capital expenditures, ... Read Full Answer >>
Related Articles
  1. Home & Auto

    4 Ways To Value A Real Estate Rental Property

    Learning these concepts is the first step in getting into the real estate investment game.
  2. Personal Finance

    The Pros And Cons Of Using Airbnb

    Here, we look at Airbnb - what it is, how it works, and the pros and cons of using this online rental marketplace.
  3. Home & Auto

    Rental Properties: Cash Cow Or Money Pit?

    Create a valuation system to forecast the profitability of an income-producing property.
  4. Home & Auto

    Top 6 Tips For Turning Your Home Into A Rental Property

    Learn what you need to do to turn your property into a rental property.
  5. Home & Auto

    5 Rental Red Flags

    Pay attention to the small things when rental shopping.
  6. Options & Futures

    Easy Ways To Cut Rental Costs

    If rent payments are crippling your finances, then read on to learn how to save your money.
  7. Investing Basics

    Understanding Related-Party Transactions

    In business, a related-party transaction refers to a transaction where parties on both sides have a common interest or relationship.
  8. Economics

    What is a Leasehold Improvement?

    A leasehold improvement is an alteration made to a rented space that customizes the space for the tenant.
  9. Economics

    What are Deliverables?

    Deliverables is a project management term describing an object or function that must be provided or completed by a certain due date.
  10. Investing

    Figuring What You Make On Rental Property (ROI)

    The return on investment can vary greatly, depending on how much of the building you own.

You May Also Like

Hot Definitions
  1. Multicurrency Note Facility

    A credit facility that finances short- to medium-term Euro notes. Multicurrency note facilities are denominated in many currencies. ...
  2. National Currency

    The currency or legal tender issued by a nation's central bank or monetary authority. The national currency of a nation is ...
  3. Treasury Yield

    The return on investment, expressed as a percentage, on the debt obligations of the U.S. government. Treasuries are considered ...
  4. Bund

    A bond issued by Germany's federal government, or the German word for "bond." Bunds are the German equivalent of U.S. Treasury ...
  5. European Central Bank - ECB

    The central bank responsible for the monetary system of the European Union (EU) and the euro currency. The bank was formed ...
  6. Quantitative Easing

    An unconventional monetary policy in which a central bank purchases private sector financial assets in order to lower interest ...
Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!