How the Sharing Economy Creates Value From Unused Capacity

For a generation often branded as narcissistic, today’s millennials certainly benefit a lot from sharing. Though millennials may have been first adopters, as they are for most new trends, they’re hardly the only ones participating in an emerging system that’s been christened “the sharing economy.” People ranging from teens to retirees are on board with peer-to-peer startups like Airbnb and Uber, which create value through the sharing of homes, cars and other assets and skills.

The sharing economy by definition is “a socio-economic ecosystem built around the sharing of human and physical resources.” This includes shared creation, production, distribution, trade and consumption of goods and services, according to The People Who Share, an online social movement that advocates for the industry.

Why share instead of buy, throw away, or leave dormant? Also called the peer-to-peer marketplace, the sharing economy offers numerous benefits. For one, sharing creates value from waste instead of proliferating conspicuous consumption. By this I don’t exactly mean turning trash into treasure, but repurposing space and objects that would otherwise go unused. Participants benefit and even turn profit through services that facilitate sharing, which have grown larger by the year.

In short, the sharing economy encourages the redistribution, repurposing, or reassignment of unused capacity in a way that minimizes costs and reduces wastefulness. It saves time, money and energy, and funnels money into a new type of industry that empowers individuals financially and encourages transactions that are mutually beneficial.

Let’s take Airbnb as an example. Prior to the startup’s launch, hotels were some of the only options for travelers. But in terms of actual space, many homes and rooms in tourist destinations stayed vacant. Craigslist paved the way for short-term home rental, but wasn’t the most trustworthy platform for various reasons. When Airbnb (and competitors like HomeAway) reliably streamlined peer-to-peer booking and payment, cities suddenly had more room for tourists. Tourists in turn boosted local economy by patronizing more restaurants and attractions.

The sharing economy has been disruptive for better or for worse in a number of industries besides just travel. Uber and Lyft have begun to revolutionize transportation by encouraging ridesharing, made easy through slick platforms that summon drivers to users’ exact locations. The garment industry is shifting from ownership to collaborative consumption, by which people can rent quality clothes from websites or buy and sell from closets in their area. Instead of going out to eat, today’s hungry folks can hire a local chef, and order meals from or dine with their neighbors. Through services like TaskRabbit anyone can hire a neighbor for handywork or errands, rent tools like power drills, or offer up parking spots. All of this puts money into the pockets of regular people, however unique or commonplace their offering may be.


The idea of sharing resources within a village or community is a strangely primitive one: humans have been bartering since the beginning of time, and for centuries people knew and trusted their neighbors well enough to offer and ask for assistance. The sharing economy creates a virtual village in which trust is essential and democracy inherent. Sharing systems these days are digital and ensure accountability to some degree, mitigating risks and thus, the need for personal connection. But the idea is the same: there is untapped value within any community. All you need to do is find it.

The sharing economy is a game changer from the perspective of both sustainability and personal value. As we realize the extent of waste in countries like the US and the damages of unsustainable consumption patterns, peer-to-peer sharing systems are a welcome alternative.

That doesn’t make it perfect, however. When people consume less new products, there can be negative repercussions for manufacturers, retailers and other businesses that create and sell new products, provide professional services, etc.

At the end of the day, it’s all about balance. Some things can’t be shared, and there will always be people that prefer ownership and highbrow accommodations. But there’s a lot of money in these growing businesses, and even more promise in the philosophy behind them. Sharing is caring, after all — and if the interest of investors and users area any indication, a little more caring could go a long way.