WHEN COMPETITION MEANS COLLABORATION

Antonio Vegas García

Nowadays the “sharing” or collaborative economy is a headline-grabbing concept, with widespread examples all over the world. From numerous apps for second-hand sales to some disruptive companies like Uber and Airbnb. According to Forbes, a magazine, the revenue for participants of peer-to-peer systems will surpass $3.5 billion this year, with growth exceeding 25%. Many think that this is the beginning of the end of the competition capitalism movement and the inception of the capitalism of collaboration. They cannot be more wrong.

Economic theory states that the more competition the better for the economy. Moreover, Ludwig von Mises, a well-known Austrian economist, wrote that capitalism is a mix between both collaboration and competition and furthermore that competition is a way of collaboration. Currently the rise of the collaborative economy has spotlighted his ideas.

The concept is quite simple. Consumers are able to get what they need from each other instead of always going to large organizations. That means that the mere collaborators are a competitor in the market, thereby increasing the competitiveness of the whole market and very likely increasing the efficiency.

Sharing economy take a variety of forms, often leveraging information technology to empower individuals, corporations, non-profits and government with information that enables distribution, sharing and reuse of excess capacity in goods and services. A commonly accepted premise is that when information about goods is shared, the value of those goods may increase, for the business, for individuals, and for the community.

A good example that illustrates the deepness of the changes caused by the peer-to-peer economy is the dialectic between crowdfunding and venture capitalist industry. With the rise of the crowdfunding many firms can get funds more easily than before, which, prima facie, could decrease the market for venture capitalists, who are the ones that use to provide liquidity to disruptive companies. Unlike the venture capitalists, crowdfunders do not take ownership, thus ceteris paribus the companies are keen to get funds from crowdfunders. However, venture capitalists not only provide monetary capital but also intellectual capital, like networking, good managers, thereby avoiding some first-comer mistakes. That is the reason there are plenty of firms receiving fund from venture capitalist. Even more, the sharing economy of the crowdfunders makes it harder for venture capitalists as they have to enhance their services, thereby increasing the overall efficiency.

The increasing importance of the sharing economy doesnt means the fade of competition, what it means is the high extent of the development of market competition.

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Antonio Vegas García is a researcher from the Shalom Institute and has graduated with a masters degree of finance from the Universidad Carlos III de Madrid (Carlos III University of Madrid).