Nowadays goods are shared — they are not exclusively owned by a specific individual. The concept of sharing “my things” with others has enabled owners to gain additional profits by giving consumers the privilege to borrow personal resources. It has also enabled consumers to gain the same utility by using the same resources or services at a cheaper price. Simply put, it allows us to generate extra income by sharing empty bedrooms with tourists at a low cost such as Airbnb or by offering someone a ride on the way to work such as Uber. You might also have sold or bought second-hand clothes or books, for example, at a flea market All these kinds of economic activities are classified as the “Sharing Economy”. However, these platforms do not seem to be prevalent in Korea. Why is that?

The sharing economy clearly has a lot of positive effects for both owners and consumers. Other than the advantages mentioned above, it makes it easy for an individual to access capital. For instance, based on the same concept of the sharing economy, crowdfunding can be a more convenient way to raise funds by connecting people in need of money, say, to start a business, with those who are willing to invest rather than applying through government associations or banks for loans. Plus, it is important in that it helps economic growth as more people get to engage in economic activities. However, when a new industry is introduced into society and if it is likely to disrupt an existing industry, there will always be conflicts. This is the main reason why the sharing economy is not widespread in Korea. Last year, for example, Kakao Mobility tried to launch a carpool service in Korea. Basically, it is a service where drivers and people travelling the same way get connected, which is one of the common sharing economy platforms overseas. However, Kakao postponed its launching indefinitely due to strong opposition from the taxi industry and no agreement has been made yet. On top of that, it might cause some kinds of crimes or abuse due to the absence of regulations.

Therefore, it is the government’s role to balance the conflicting interests and to regulate them. Some examples might include the examples of England and France when it comes to carpool service. England has introduced the requirement of insurance registration for ride share drivers and France permits the service only in the case of long-distance travel from one city to another city. It can be also one of the ways to put a limit on the number of times carpool drivers can drive. Like this, to bring a new economy into Korean society, it is necessary to find out the applicable mediation so that the conflicting industries can coexist and not damage the consumers’ benefits or let one industry fall behind.

Editor’s Note

1) On March 7th, 2019, the taxi industry and a shared mobility operator finally reached an agreement. The carpooling service is going to be launched on the condition that it is allowed during weekday commute hours and not on weekends and holidays. However, no other details of the agreement have been made and there are some criticisms because of its limitations.

2) You might think it’s bound to happen that less productive industry without competition dies in a free market system and that it is not necessarily the government’s job to bail it out. I partly agree with this. It is always the consumers’ decision to choose what products and services consume. For instance, if an individual puts a high value on safety, he is likely to take a taxi rather than use Uber. If someone values price over safety, she might make a different choice. However, I want to let the readers know that since the resistance of the original industry is the main reason why the sharing economy is not fully welcomed in Korea, I wrote the article under the conclusion that in order to include a new economy, government intervention is required as long as it harmonizes with free market entrepreneurship.

Cho Aruem  aruemcho@gmail.com

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