Lawmakers in Louisville, Kentucky are imposing new regulations restricting consumers’ ability to use popular peer-to-peer economy housing services such as Airbnb and VRBO.
In June, the Louisville Metro Council approved ordinances restricting how and where people may use the services, which connect tourists seeking short-term housing and hosts providing places to stay on their property.
The ordinances impose new fees and licensing requirements and prohibit property owners’ participation in peer-to-peer economy services in certain parts of the city.
Free Markets in Action
Jim Waters, president of The Bluegrass Institute for Public Policy Solutions, says the peer-to-peer economy, also referred to as the “sharing economy,” is a good example of how free markets work.
“The sharing economy functions more like a true free market,” said Waters. “For the most part, it puts buyers directly in contact with suppliers without government, unions, regulators, middlemen, conglomerates, and other entities getting in the middle of the transaction.
“For example, passengers contact Uber directly and work out the entire details of their ride,” Waters said. “City regulators and big taxicab conglomerates are removed from the equation altogether. One thing’s for sure, Kentucky needs to do a better job of protecting the freedom of its creative entrepreneurs to pursue their dreams and grow successful.”
Connecting People with People
Christopher Koopman, a research fellow with the Mercatus Center at George Mason University, says sharing-economy services are not new services; they are old services working in new ways.
“It isn’t that the services provided by the sharing economy are radically different from traditional service providers, but the mode in which it operates is certainly new and radical,” Koopman said. “Instead of relying on professional drivers to get you around town, Uber allows you to connect with your neighbor looking to make some extra money. Instead of having to rely on hotels or the generosity of friends and family, Airbnb allows you to connect with people willing to share their home and give you a bed.”
Koopman says everybody is a winner in the sharing economy.
“It is creating more choices, making life more efficient, and pushing existing service providers to compete in ways they’ve never had to before,” Koopman said. “This means that consumers are much better off. It certainly benefits providers, too. It is creating opportunity for those in need and opening doors that have been shut to those looking for work.”
Koopman says the new Louisville restrictions do not really make consumers safer.
“I do not think that banning Airbnb is making Louisville a safer city,” Koopman said. “I think the best that policymakers can do at this point is to get out of the way.”
Lindsey Curnutte ([email protected]) writes from Athens, Ohio.
Daniel Guttentag, “Airbnb: Disruptive Innovation and the Rise of an Informal Tourism Accommodation Sector,” Current Issues in Tourism, December 1, 2013: https://heartland.org/policy-documents/airbnb-disruptive-innovation-and-rise-informal-tourism-accommodation-sector/
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