Adaptive governance and decentralization: Evidence from regulation of the sharing economy in multi-level governance

When does decentralization lead to adaptive governance? This study proposes a conceptual framework of the necessary conditions in which decentralization may result in adaptive governance. We thereby consider two distinct forms in the context of multi-level democratic governance: central and local governments. Based on prior findings that local governments are more sensitive to democratic influences than central ones, we point out that decentralization may hinder the process of adaptation if the considered policy embodies entrepreneurial politics (i.e., if the adaptation generates widely distributed benefits but narrowly concentrated costs). To support our analyses, we use the example of the recent rise of the sharing economy, as manifested by Airbnb, and present qualitative evidence suggesting that higher-tier (central or federal) governments are relatively more favorable to such sharing services than lower-tier (local or city) governments.