The Impact of Car Sharing as the Part of Sharing Economy

With the advancement of technology and the ease of connecting through digital platforms, sharing economy has now become a trend for businesses. It allows individuals or companies to share their under-utilised assets. For instance, people can share their flats or rooms through Airbnb for travellers or share their cars through Uber to offer ride-sharing services. These peer-to-peer platforms gain a significant amount of revenue. Forbes states that Lyft’s, one of the prominent ride-hailing services, revenue doubled in 2018 as compared with 2017. Uber has even become the most popular form of private hire transport in New York.

Car Sharing

Car sharing is a type of car rental which allows users conveniently rent a car for a short period of time or only pay for their usage based on miles travelled or the journey time. It encourages people to share their cars with others through joining car-sharing organisation. Uber, being one of the pioneers of share economy, provides a platform to connect passengers and drivers. Passengers simply just set their destination and a driver will be assigned to drive them to their destinations.

Various studies have delved into the impacts of carsharing on the economy and society. Carazan et al. explore whether Uber can substitute for car ownership by comparing six different scenarios - from owning a car, just relying on Uber to using both Uber and personal car. They look at each case from the economic and environmental perspectives. They present that the total cost of owning a car is the least, with $124,282 compared to $151,794 of using Uber only and $191,875 of using Uber and personal car together. However, using Uber solely with high fuel economy generates the least amount of carbon dioxide. They suggest that both using Uber alone and owning a personal car have their own benefits. Hence, there is no clear evidence of whether Uber can substitute for personal cars.

Car sharing also prompts the question of whether it can solve social issues such as traffic congestion. As these ride-hailing services transport multiple passengers at the same time to a common destination, it claims that it will reduce traffic. Li et al. provide empirical evidence that Uber does substantially decrease traffic congestion in the urban areas of the US. They also propose four different factors leading to such result: Ride-sharing reduces the total number of cars on the road by increasing the occupancy level in the car. Uber also gives a lower cost alternative to owning a car and thus reduces car ownership. They also suggest that ridesharing shifts the demand of other transportations as it now provides an alternative mode of transportation. Furthermore, the use of surge pricing strategy in Uber reduces traffic during peak hours.

Conclusion

In conclusion, there are plentiful researches discussing the consequences of car sharing in the bigger markets such as US. Yet, literatures about the effect of it in the UK are minimal. Hence, this dissertation aims to further investigate the impact of using these car-sharing services by exploring how Uber affects car ownership in the UK.