Faculty Author Type

Current Faculty [Erez Aloni]

Document Type

Book Chapter

Publication Date



sharing economy, platform economy, gig economy, Uber, Airbnb, short-term rentals, excess capacity, idle capacity, pluralism, consumer’s choice, regulation, housing shortage, freelance


Providers use platforms in dissimilar ways. Some providers create new capacity and designate it for exclusively commercial use via platforms. For example, a provider buys a car that serves predominantly for driving paying passengers, converts a standard residential rental to a short-term rental, or works full-time via a platform. Conversely, other providers leverage their idle capacity and monetize it (e.g., a provider uses the family car to drive platform passengers in the evenings). This chapter argues that the distinction between new and idle capacity is a fundamental concept that should guide regulation of activities in the platform economy. Creating new capacity for platform use creates negative externalities that are likely to reduce choices for consumers and providers. Examples include reduction in the availability of traditional services (e.g., hotels, taxies), decline in availability of standard residential rentals, and cutbacks in protected employment opportunities. However, putting excess capacity to platform use produces lower negative externalities and can bring benefits: increasing the availability of flexible employment opportunities and expanding consumer market choice. The chapter deploys the theory of pluralism to support regulation that increases employee and consumer choices but also curbs harms attendant to the platforms and protects traditional services and institutions that are important to society.



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