The Supply-Demand Framework of Sharing Economy - Perspective of Transaction Cost Theory

With the development of information technology, sharing economy emerged and showed a strong lifeblood. However, theoretical research is far behind the practical application. Based on the perspective of Transaction Cost Theory, a supply-demand framework of sharing economy was built to lead a more clear understanding of the nature of sharing economy. Findings showed that values created by sharing platform root in their ability to reduce transaction cost among users, which depends on the number of users. Through attracting more people to become their users, sharing platforms make the value they created come into reality. And by taking a commission on transactions among users, platforms distribute the benefit of the value created between themselves and their users. Monopoly sharing platform can maximize value creation, but the commission it takes can result in a low economic efficiency, which calls for a regulation of government. The complex relationship between platforms and their users also provides new challenges to the management of platform's users and the formulation of public policy. These understanding provides references for sharing platform managers and policy makers, and some future directions were proposed.