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Report on the Innovation in the Collaborative Economy

This report was conducted for the Ministry of Economic Affairs.

Summary This report summarises research on barriers to investment in innovation and whether

opportunities are currently feasible or not in the collaborative economy, and in the

area of green growth. For this purpose, multiple roundtable meetings have been

organised and interviews have been held with entrepreneurs, academics, legal experts,

representatives of companies and government, who are active in the field of the

collaborative economy. This summary sets outs the priority aspects of the collaborative

economy which require action.

The collaborative economy contributes to green growth, but its potential can be

utilised better. This can be achieved by looking at the opportunities and barriers, which

now exist because the difference between producers and consumers has become more

blurred, as well as changing trends of consumers renting or sharing products rather

than owning products. As a result new risks and questions arise concerning liability,

taxation, and competition. This report suggests a role for the government in four areas:

(1) to ensure that current legislation is clear in how it applies to the collaborative

economy; (2) to provide regulatory flexibility for experiments; (3) to monitor relevant

developments and safeguard the public interest; and (4) to address the barriers that

have been identified in this research.

Defining the collaborative economy The term ‘collaborative economy’ is often used to denote a wide range of “economic

systems of decentralized networks and marketplaces that unlock the value of

underused assets by matching needs and haves, in ways that bypass traditional

institutions”. This research focuses specifically on goods, energy, and transportation

markets – including the sharing of parking spaces – in the context of green growth.

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Priority areas for action The traditional roles of, and relationships between, the government, businesses, and

the consumer are changing. The government has to deal with new types of businesses,

which also operate as digital platforms. These platforms allow a consumer to become a

producer with a click of the mouse. This ‘producing consumer’ is a direct competitor to

existing businesses. This leads to innovation as the incumbent businesses develop new

products and services, but there is also a risk of an uneven playing field between the

‘private supply’ being created by the producing consumers and the supply provided by

the incumbent business. This development can in the long term lead to shift of norms

in society from sole ownership to shared ownership and shared access to products.

The purpose of this report is to set out what action the government should take in

response to these trends.

The opportunities, barriers, and priority areas for action outlined in this report are

focused around the triangle formed by the government, consumers, and the business

community. Four categories that are of interest to the government are described

below, followed by developments in the market where government intervention is not

necessary:

1. Green growth and the collaborative economy The collaborative economy results in a more efficient use of existing goods. As a result,

the collaborative economy in general has a positive impact on the environment.

Therefore, further growth of the collaborative economy is desirable. The government

can contribute in two ways to the growth of the collaborative economy. The first is to

raise awareness of the opportunities that the collaborative economy offers, by

providing information on and participating actively in the collaborative economy. To

achieve this, the government should record its spare capacity and unlock this internally

as well as externally on sharing platforms. The second is that sharing platforms could

be considered as part of the public procurement procedures as well as for individual

purchases.

2. Consumer interests Issues such as liability, taxation, and competition are governed by laws and regulations

which differentiate between consumer and producer as well as private individual and

entrepreneur. The development of collaborative economy initiatives results in the

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blurring of the line between these traditional roles. As a result new questions have

arisen on these themes which need to be carefully considered, paying particular

attention to issues of public interest such as security, quality, and reliability. For this, it

is important to have clarity on the nature and scale of the collaborative economy

initiatives. It is then important to clarify and to communicate to the citizens active in

the collaborative economy, as currently they are often ignorant of their own risks and

responsibilities. For example, there is confusion as to whether to pay VAT.

3. Business interests Enterprises from the collaborative economy, such as Airbnb and Snappcar, can often

be characterized as a “digital platform”. This requires a different approach from the

government. Traditionally businesses were regulated, as businesses were the owners

of the means of production and personnel used to create the “supply” of a good or

service; however, now enterprises are arising that possess no means of production but

simply bring together through digital means existing unmet supply and demand. This

raises all kinds of questions which are relevant to the government, for example, in the

field of liability if a transaction goes awry. It is difficult to estimate what fiscal and

judicial regimes are applicable to existing initiatives in the collaborative economy, and

what the consequences will be. A way to determine whether a different approach is

needed is to facilitate experimental “zones” which test different forms of regulation

and policy.

Market actors can apply these to determine whether they achieve the objectives of

existing regulation while operation in new, more appropriate, ways. A ‘classic’ example

is the taximeter, which may become redundant as a result of app and GPS technology.

Another example is the use of sharing platforms when executing public sector policies:

taxes can also be raised via these platforms. To provide clarity, the government could

open an information service for entrepreneurs on the legal and fiscal frameworks

which apply to these new forms of trade and business models. This will aid the

important task of connecting the terms that are being used in the collaborative

economy with the legal terms.

4. The market In the different markets in which there are collaborative economy activities, an uneven

playing field can arise between the existing business-to-consumer supply and the new

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consumer-to-consumer supply facilitated by digital platforms. A real possibility of

unfair competition exists in various markets between these platforms and existing

businesses, for example, hotels and Airbnb. The government can guarantee a level

playing field with standardisation: by declaring explicitly that existing legislation is

applicable to new platforms. An alternative for standardisation is innovation: the

government can develop new standards in cooperation with market actors (i.e. new

digital platforms as well as existing businesses). These standards can be enforced

through, for example, permits.

Developments in the market There is a need for cooperation within the market, for example, in the fields of

insurance, marketing, representation, and integration of services, such as platforms.

ShareNL, which as of 2013 functions as an independent knowledge and network

platform advises and provides guidance to businesses, start-ups, governments and

knowledge institutes. Several further initiatives and partnerships will shortly be

launched:

• An association of Dutch sharing platforms seeking to promote the interests of

its members.

• A country-wide ‘Sharing City’ platform where data from test projects in the field

of the collaborative economy and on behalf of different cities can be made

available. For participating departments, the Sharing City platform is a testing

ground for cases that can be used for shaping or amending legislation.

• The Green Deal Autodelen, which aims for 100,000 shared cars in the

Netherlands by 2018.

The cooperation gap will to a large extent be addressed by existing initiatives. The

government can also potentially accelerate the development of the collaborative

economy by amending existing initiatives aimed at cooperation.

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