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How should the sharing economy be regulated - and remain profitable?

by AirTalk®

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The Airbnb website is displayed on a laptop on April 21, 2014 in San Anselmo, California. Online home-rental marketplace Airbnb Inc. is about to receive more than $450 million in investments from a group led by private-equity firm TPG. The new investments will value the startup at $10 billion, significantly higher than some publicly traded hotel chains. Justin Sullivan/Getty Images

The sharing economy is increasingly seeping into everyday life across genres and interests as Silicon Valley companies cut out the middlemen and cash in on their ability to connect people and resources.

One of the most successful sharing businesses is Airbnb, a site that rents out lodging globally by having homeowners list spare rooms and apartments for travellers. The company was recently valued at $10 billion and has begun expansions that aim to put it on par with hotels.

Users like AirBnb because they save on renting rooms -- Airbnb listings are cheaper than hotels. And the users who list their properties cash in too, in big cities, hosts can earn thousands each year.

The hotel industry, on the other hand, thinks Airbnb is poorly regulated and it siphons off profits from businesses that are playing by the rules. Airbnb’s critics want to prevent landlords from evicting tenants to list properties and to restrict the ways short-term rentals can be utilized so that entire buildings can’t be devoted to Airbnb.

Airbnb has begun paying hotel taxes in some cities, like San Francisco and Portland, and is continuing to adapt its business to comply with restrictions in individual cities.

How should Airbnb be regulated? What does it mean to “play by the rules” in a sharing economy? Is there a way to regulate businesses in the Airbnb model across the board, or are their focuses too niche to create broad rules?


Michael Chasalow, professor at University of Southern California’s Gould School of Law, director of USC’s Small Business Clinic


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