As mentioned in the introduction, the circular economy can be seen as a broad definition for a collection of initiatives that aim to contribute to the paradigm shift. This chapter further elaborates on the different sorts of perspectives of the circular economy and the sharing economy. Thereafter, various business models for carsharing are categorised with examples of companies executing these business models. Next, the chapter elaborates on the factors that clarify how society responds to this sort of business model, aiming to expose the most prominent motives for carsharing. After that, the P2P carsharing model currently used is discussed and visualised using platform theory and network externalities. This is followed by an elaboration on blockchain technology and its potential disruptiveness and finally the conceptual model is presented.
2.1 The Circular Economy and the Sharing Economy
The concept of a circular economy was introduced for the first time in 1990 by Pearce & Turner (1990) (Su et al., 2013). By analysing the relationship between economic and natural systems they proposed a closed loop of material flow within an economy, by that time rather known as recycling (Ma et al., 2014). Since then, the term circular economy has been redefined up to the definitions it has today. Although approaches in accordance with circular economy guidelines have been around much longer, the term and the growing attention has been established around 1990. Due to the substantive growth in attention for circular economy and sustainable development, many individuals have different perspectives on the concept, leading to different understandings that circulate in the academic world. It is important to pose a clear approach and lay out a distinct overview derived from various literature. Ma et al. (2014) defines the circular economy as: ‘a mode of economic development that aims to protect the environment and prevent pollution, thereby facilitating sustainable economic development’ (Ma et al., 2014, p. 506). One could argue this would only contribute to the first step in the paradigm shift [i.e. TBL]. However, this step has to be made first in order to start with the second paradigm shift [i.e. TTL].
The described paradigm shift will change the way businesses act, the miscellaneous designs of circular models demand a revision of current business models (Bocken et al., 2016). A basis for these circular business models has evolved among with circular product designs. For example, Bocken et al. (2016) presents some product designs and business model strategies in order to develop the circular economy. The resource cycles; slowing, closing and narrowing, building upon the work of Braungart et al. (2008); McDonough & Braungart (2010); Stahel (1982); Stahel (1994) and Stahel (2010) lay out various concepts to show how resources flow through a system. They expand slowing and closing cycles as strategies for circular business designs and circular business models. Developed from Bocken et al. (2014) and Bakker et al. (2014) they present business model innovations to slow and close resource loops. One of these presented business model innovations is the ‘access and performance model’ defined as: ‘providing the capability or services to satisfy user needs without needing to own physical products’ (Bocken et al., 2016; p. 313). This model is more broadly known as the sharing economy. During the past several decades, alternative modes of consumption that challenge sole ownership as the dominant means of obtaining product benefits have been increasing (Lamberton & Rose, 2012). Botsman & Rogers (2010) suggest a simple general approach for the sharing economy; an economy based on access rather than ownership. Multiple companies have been established in various sectors using this as business model [e.g. Airbnb, Peerby, Snappcar]. The sharing economy, in this case also referred as ‘Collaborative Consumption’ [CC], has grown as result of the development in information and communication technologies (Hamari et al., 2016; Kamilaris & Prenafeta-Boldú, 2017; Matzler et al., 2015; Heinrichs, 2013)). Botsman & Rogers (2011) imply sharing practices heavily rely on new ICT, making this form of consumption flexible and highly accessible. Hameri et al. (2016) considers the sharing economy as ‘an umbrella concept that encompasses several ICT developments and technologies, among others CC, which endorses sharing the consumption of goods and services through online platforms’. Hamari et al. (2016) suggests a slight difference in collaborative consumption and the sharing economy. Hameri et al. (2016) views CC as an activity rather than just consumption where both the contribution and use of resources are intertwined through P2P networks. Belk (2014) defines CC as ‘people coordinating the acquisition and distribution of a resource for a fee or other compensation’. (Belk, 2014, p. 1597).
The literature offers many different definitions and names for similar models and terms. As previously mentioned, Bocken et al. (2016) discusses the ‘access and performance model’. This model has a broad description; satisfying user needs without handing the ownership over to the user. Even though this is what the [car]sharing economy does, it could be interpreted more broadly. If this would be the definition used, staying in a hotel room would fall under the sharing economy. The sharing economy knows many definitions as well as the circular economy (Acquier et al., 2017). These terms can be seen as an umbrella construct, which is defined as: ‘a broad concept or idea loosely to encompass an account for a set of diverse phenomena’ (Hirsch & Levin, 1999, p. 200). Meaning individuals can interpret the terms differently and apply various approaches within the same concept. Therefore, Arnould & Rose (2016) argues it is not clear how to define the sharing economy. Although various definitions have been put forward in the recent years, no single description has widely been accepted by research and practitioner communities (Novikova, 2017). Given that finding a proper definition or categorising this term is beyond the scope of this study, and since the access and performance model reduces supply and extends and increases the use of products (Hamari et al., 2016), this study adopts that the sharing economy in general assists in the paradigm shift to a more effective economy. The main assumption is that all sharing economy concepts contribute to a more circular economy, which strengthens the paradigm shift. Thus, if carsharing is more widely adopted, it ensures a lower demand of cars (Jorritsma et al., 2005; Loose, 2010; Martin et al., 2010; Schroders, 2016, Shaheen & Cohen, 2007), which subsequently contributes to the paradigm shift.
Acquier et al. (2017) divides the sharing economy in three foundational cores: access economy, platform economy and community-based economy [Figure 1]. The access economy emphasises the possibility to share underutilised assets with others. Hereby the asset itself increases its usability and it reduces the demand for new assets. The platform economy is defined as an intermediate decentralised exchange where peers can arrange these exchanges of assets. The third, community-based economy, is focused on non-monetary sharing, for example contributing to a community product. Analysing these definitions, the boundaries are not set very clear in terms of what belongs to which specific approach. Due to this myriad of different concepts surrounding sharing economy business models, circular economy approaches and sustainable guidelines, this study will follow a rather simplified definition of the goal, a development that certainly contributes to the overarching objective to steer the economy more in lines of the TTL. The focus is on business models that reduce the total demand for cars and maximise the use of existing cars [mostly corresponding to the access economy in Acquier et al. (2017) and the access and performance model in Bocken et al. (2014), made available by the platform economy as suggested in Acquier et al. (2017)]. This entails every business model within the carsharing industry, which means that every approach with the goal of lowering the demand for cars can be seen as a positive development towards the goals of the paradigm shift.
This study categorises the carsharing approaches in a clearer form, namely by the nature of the business model. The categorising of the business models is first determined based on the core characteristic of the business model, either a business-to-consumer [B2C] approach or a P2P approach.
2.2 The Business Models of Carsharing
The literature presents many different perspectives and approaches on categorising and naming different modes or business models of carsharing. This section maps these approaches and creates clear and applicable categories for the research objective after analysing and considering the work of Acquier et al., (2017), Barth & Shaheen, (2002), Cohen & Kietzmann, (2014) and Millard-Ball, (2005). The categorised business models are described below. Additionally, the concept of ridesharing [closely connected to carsharing] is briefly explained. The first distinction between carsharing business models is between B2C and P2P approaches. The main difference between B2C models and P2P models is that in a P2P business model the company does not own cars, whereas in a B2C model the company has a fleet of cars to offer (Cohen & Kietzmann, 2014). Some companies combine both [e.g. Mywheels], but most have a clear distinction. Within these two categories the current business models are still different, which will be elaborated in the part below. Table 1 summarises the discussed business models in the following part in a clear way. Additionally, Table 1 also shows some other carsharing companies that function as an example but are not mentioned in the text.
2.2.1 B2C Business Models
B2C business models can best be compared to common car rental companies, though in this case the rental process is more accessible. The company-owned cars are diffused throughout the city at key points (Cohen & Kietzmann, 2014). Besides, most companies use an app in which they offer immediate access to a car when necessary and provide access to the car by a card. In the USA Zipcar is the largest provider, in the Netherlands the market is more diversified. The companies who obtain the largest market share in the Netherlands are Greenwheels, Car2Go, Connectcar and MyWheels. In the Netherlands these cars often have prominent parking spaces in city centres, recognisable with the sign ‘Autodate’.
Within the businesses who offer a fleet of cars to their users, there is another distinction to be made. Most providers solely offer roundtrips [i.e. the car needs to be returned to the same place], where other providers also offer point-to-point service, meaning the car can be left somewhere else as well (Cohen & Kietzmann, 2014). The same service is also applied in the traditional car rental business. If a car needs to be returned at the same point, this study will mark this as a B2C AtoA concept. Whereas the providers who allow the car to be left in another place will be described as a B2C AtoB business model.
2.2.2 P2P Business Models
The companies who execute the P2P business models in the carsharing industry often do not own cars, they solely are a platform in which car owners can share their cars to other individuals. The company arranges the legal and financial issues (Cohen & Kietzmann, 2014). This is best applicable to car owners who hardly use their car, by offering their car on the platform users can choose their preferred car and reserve this for a certain amount of time. When the car owner approves this, the company ensures the payment and legal issues and necessary checks [i.e. the user obtains a license, the car is insured and in a good physical condition]. The company keeps a small fee. The biggest company in the Netherlands executing this business model is Snappcar. Besides their fleet business model, the previously mentioned MyWheels offers this approach as well. Turo is the biggest company executing this business model in the United States. Section 2.5 elaborates on the characteristics of this business model and how it functions as a platform with a two-sided market.
2.2.3 Not-for-profit
Next to the companies that offer these services there are a few initiatives who offer non-profit carsharing. Mywheels for example is a not-for-profit organisation. However, it runs like a normal company that just wants to outperform its costs instead of maximising profits, therefore it does execute a business model. A different example is deelauto.nl, this association aids groups of people in arrainging a shared car in terms of legal issues and insurances. Not-for-profit carsharing concepts such as deelauto.nl are not-for-profit initiatives that help by constituting a sharing car for a select group and thereby aim to reduce the total amount of cars. Although these initiatives contribute to the growth of carsharing, not-for-profit organisations is not the focus point of this study since the focus is on the business models and systems which results in a value proposition to the user, these initiatives solely provide help and do not employ a for-profit business model. Besides, these organisations often rely on subsidies (Cohen & Kietzmann, 2014).
2.2.4 Ridesharing, Something Different.
Fairly different from the concept of carsharing is the concept ridesharing. This entails also ‘sharing a car’, but in a more dynamic way, it could be best comparable to a common taxi or on-demand carsharing (Agatz et al., 2012). Again, here is the division between B2C and P2P business models. B2C is almost indistinguishable from common taxi’s. The main difference is that the company itself does not own cars or employs drivers. Well known examples are Uber and Lyft, these two major companies have grown by massive proportions in the past decade. They offer a service similar to a taxi, but it acts as a platform. People who have an approved car [by the company] and are approved themselves can be active whenever they wish, users can place orders in the app with position A and position B and the amount of people they would like to travel with. If an Uber- or Lyft-driver sees this offer it can accept it and bring these individuals to their designated area for a certain price, determined by the company, where the company withholds a small fee for the use of the platform. The literature often names these examples of Uber and Lyft ‘P2P ridesharing’ practices (Agatz et al., 2012; Cohen & Kietzmann, 2014). However, it could be argued companies as Uber and Lyft do not classify as ‘P2P’ approaches, since they offer a similar service as a taxi, meaning if there were no users on the platform, the ‘car owners’ [i.e. Uber or Lyft drivers] would not be making this trip (Pick & Dreher, 2015). P2P looks very similar, nevertheless it differs from the previously mentioned because in this case it will not encompass people who are exclusively driving for the users, therefore this approach is classified as P2P. An example of a P2P ridesharing business model is BlaBlaCar. The approach of this business model is that car owners upload all planned rides with the seat capacity of the car online. If someone who does not own a car is about to make approximately the same travel, he or she can apply to this ride and whenever the owner accepts it they travel together. This could be seen as carpooling with strangers. The company arranges the payment from the user to the car owner. The concept of ridesharing will not be included in this study, nevertheless it is important to have knowledge of the existence of the concept since it is highly correlated with the carsharing approach.
Carsharing Explanation Examples
P2P The company does not own a fleet of cars, it operates as a platform where car owners can share their car with users. Snappcar, MyWheels, SharePlanet,
ParkFlyRent, Share2use, SplitCar, WeGo, Car2Gether , Turo
B2C AtoA The company owns a fleet of cars and offers a service similar to traditional car-renting, though easier and on shorter terms. The car needs to be returned at the same location. MyWheels, GreenWheels,
ConnectCar, Stapp.in, ZipCar
B2C AtoB The company owns a fleet of cars and offers a service similar to traditional car-renting, though easier and on shorter terms. The car can be left at various other places. Witkar, Car2Go
Ridesharing
P2P The company solely acts as a platform where car owners can share their upcoming trips upon which users can request to ride along. BlaBlaCar, Toogethr, Karzoo
B2C The business acts as a traditional taxi company, however it does not own cars or employ drivers. It acts as platform where users can ask drivers to bring them to their designated area. Uber, Lyft
Table 1: Summary of discussed carsharing business models.
2.3 Determining the Scope
This study further focuses on a specific part of carsharing: P2P carsharing. As made clear above, there are some substantial differences between the different sorts of carsharing. This study aims to propose valuable theoretical propositions for blockchain incorporated P2P carsharing practices, therefore the author argues that including all types of carsharing creates a scope that is too large and consequently assures no specific theoretical propositions can be made. Besides, if other types of carsharing are included, such as B2C, this study is unable to generalise its findings up to a certain extent to other P2P sharing practices. Additionally, as becomes clear in section 2.6, where the blockchain technology is be explained and discussed, blockchain has potentially much value for P2P practices since it offers a P2P possibility of value exchange, without a third party. As Huckle et al. (2016) describes, blockchain enables sharing without requiring a trusted third party, which effectively eliminates the middle man, shaping many opportunities for sharing applications in a decentralised P2P network. More arguments why the blockchain technology obtains potential value for the specific case of P2P value exchange are discussed in section 2.6.2. Since this study focuses on business models and the corresponding value proposition of the platform, it will only incorporate for-profit organisations. Thus, the scope of this research is on P2P carsharing practices with for-profit business models, as visualised in Figure 2.
In order to provide clarity with respect to the multiple concepts, definitions and overarching umbrella constructs discussed in this part, Figure 3 clearly shows how this study derives P2P carsharing and how it relates to the paradigm shift and the other discussed concepts. Most of these terms know many definitions and can be interpreted in various ways, therefore Figure 3 shows in which way this research envisions the relationships between the interrelated concepts. Taking all of this together, the main assumption is that every concept that increases the use of [P2P] carsharing contributes to the ultimate goal: the paradigm shift.
Altogether, there can be named some barriers why the carsharing industry has not evolved yet in bigger proportions. Additionally, some advantages can be appointed as well. This section will discuss various aspects of carsharing in particular, what motivates or prevents people from taking part in P2P carsharing. The end of this section will present the utmost important factors that play a role for people to decide whether or not to participate in carsharing or not.
Various literature have been investigating motives that people carry in their motivation in the decision whether or not they participate in [car]sharing. Kim et al. (2015) argues trust and relative advantage are the most important factors for people to participate in the sharing economy, while Nica & Potcuvaro (2015) states that involvement in the sharing economy is driven by economic and ecological interest in addition to an inclination to boost social relationships. Hamari et al. (2016) suggests people participate in CC because of the factors sustainability, enjoyment of activity and economic gains. Whereas Schaefers (2013) states the motives for people participating in carsharing are value-seeking, convenience, lifestyle and environmental motives. Matzler et al. (2015) names cost reduction, benefit augmentation, convenience and environmental consciousness as factors for consumers to participate in the sharing economy. Furthermore, there are many other studies that claim to have found the factors that influence the choice of people to participate or not, but have found other factors or named these factors differently. Besides, the findings are not always consistent. For example, environmental awareness has been named as an very important motive by multiple studies (Truffer, 2003; Burckhardt & Millard-Ball, 2006; Efthymiou et al., 2013; Matzler et al., 2015), whereas others claimed it not as that important compared to personal utility [convenience] motives (Lane, 2005; Schaefers, 2013). This continues for other aspects as well, the literature is not unified in every aspect. The following part will categorise the most eminent influence factors for individuals to decide whether or not to participate in carsharing [sharing intention] by addressing existing literature in order to expose clearance and form overarching factors. The addressed literature used to find the most important factors is shown in Table 2, where the second column describes if these found factors are for carsharing in particular, the sharing economy or collaborative consumption.
In our consumer society the cost of a good or service still prevails by many individuals in the decision of making use of it. Private car ownership comes with various fixed monthly costs, including; insurance, road tax, reparations, deprecation and so on, therefore car ownership is a relatively high expense in relation to other objects owned by individuals (Alzcorbe & Starr-McCluer, 1997; Efthymiou et al., 2013). In addition, consumers are often faced with several risks and costs inherent with ownership, such as financial, performance or even social hazards (Moeller & Wittkowisky, 2010). Carsharing entails many positive aspects in terms of economic value since it encompasses a total package, meaning there are no additional costs (Millard-Ball, 2005). Thus, users will not perpetrate a common error that is usually committed; understate the actual cost by miscalculating the variable cost (Morency et al., 2008; Shaheen & Cohen, 2007; Shaheen et al., 2009). There is a tipping point where private car ownership and carsharing meet in economic value, as Litman (2000) describes, the fixed costs related to private car ownership and variable costs related to carsharing cross at a certain point, depending on many variables. However, it is hard to depict when it is economically more lucrative to participate in carsharing since this is very case specific and entails many variables, such as insurance [depends on type of car, history of driver, living area], road tax [depends on given area, country, type of car], fuel costs [depends on type of car, driving style, traffic congestion] and so on. It could be more easily compared to other competitors which entail less variables, such as car rental or taxis. However, there can be argued these factors have been subject to more fluctuation since the publication of this research [2003]. Since the arrival of ridesharing apps many taxi platforms and taxi companies have initiated real-time dynamic pricing, such as the algorithm of Uber that constantly computes the price on various factors [surge pricing], these factors can include rush hour, special occasions or bad weather (Moon, 2015; Cohen et al., 2016). Nonetheless, Cervero & Tsai (2003) conducted this study where they compared carsharing, car rental and taxis within dissimilar time frames and distances, in general they concluded carsharing is the most cost-effective in short time frames. However, they have not included private car ownership, namely because of the abovementioned various factors that influence the cost of private car ownership. Although they encountered less variables as in private car ownership, their results are still hard to generalise due to the fluctuating character of the prices for as well car rental as taxis as stated above. Besides, this study was conducted fifteen years ago, arguably the results of a similar study nowadays would produce a different outcome. Nevertheless, it gives an interesting view of the relation between carsharing and its direct competitors [Figure 4]. Altogether, there can be concluded that the price of carsharing is an important factor for individuals in the decision to participate in carsharing (Litman, 2000; Truffer, 2003; Lane, 2005; Millard-Ball, 2005; Burckhardt & Milliard-Ball, 2006; Efthymiou et al., 2013; Schaefers, 2013; Matzler et al., 2015; Nica & Potcuvaro,
The first two carsharing initiatives in Switzerland were constituted by environmentally concerned individuals (Truffer, 2003). Taken into account the rising debate for sustainability, we can expect more people to embrace this factor in the near future. The environmental benefits associated with sharing economy systems center around extended product life spans, lower overall resource deployment, and maximised use (Kathan et al, 2016). Lane (2005) suggest participants report increased environmental awareness after being concerned in a carsharing practice. Although this can be an important factor for people to commit to carsharing, this will be an intrinsic motive in which the carsharing platform has hardly any influence on. Nevertheless it is important to consider environmental awareness as an characteristic of people that has influence in the decision to participate in carsharing.
Due to the status quo of every individual owning a private car, people tend to rely on their car and value this flexibility. Private car ownership and carsharing both have advantages and disadvantages. It depends on the individual what he or she finds convenient or not. For example, whereas the consistent availability of a private car outperforms the uncertain effect of reserving a car in advance with carsharing, carsharing avoids the burdens and responsibilities of private car ownership [e.g. maintenance, insurance, paperwork] (Shaheen, 1999) or parking problems. Additionally, the level of convenience also differs per specific carsharing approach or company. Convenience can be interpret in several ways, the literature also describes dissimilar interpretations of convenience. Schaefers (2013) states that users clearly desire a carsharing service that makes their life easier, so carsharing practices should ensure for example possibility of flexible use, easily accessible parking spots, reduced responsibility and simple pricing methods. Given the particular different aspiration of every [potential] user, it is hard to name specific definitions of what can be labelled convenient or not. Nonetheless, we can conclude that the factor convenience, in various ways, is of great importance in the valuation of carsharing (Shaheen 1999; Truffer, 2003; Lane, 2005; Millard-Ball, 2005; Burckhardt & Milliard-Ball, 2006; Efthymiou et al., 2013; Schaefers, 2013; Matzler et al., 2015; Kathan et al., 2016). This study will mark everything that in general can be considered as more practical, easier or accessible as a positive development in convenience [e.g. more shared cars available nearby, more available parking spots, more users, better interface, less paperwork and so on]. Overall, the most important factor influencing convenience is the amount of users collaborating on the platform, this is further elaborated and discussed with the use of platform theory in section 2.5.
Since P2P-sharing encompasses an exchange between peers, there can be argued that there are more opportunities of starting and maintaining social relationships (Kim et al., 2015). As Schor & Fitzmaurice (2014) suggest, users of sharing systems expect social benefit to satisfy the desire and increase social connections. Belk (2009) shows that sharing produces and reproduces social relations. Kathan et al. (2016) even names social interactions as an advantage that can thrive the sharing economy further. However, some research claims this to be often non-existent in the specific case of carsharing due to the reason the two exchanging parties rarely met, on account of remote access technology (Fenton, 2013). This study argues this is completely dependent on the access technology a specific company utilises. Nowadays, most P2P companies still use physical key transfer, which therefore fosters social relationships. Besides, if people would rank seeking social relationships very high, they have ample choice of other carsharing practices which do not utilise these technological solutions. Additionally, Lamberton & Rose (2012) postulates that sharing participants might participate in a sharing practice for the gains that may accrue in the form of approval of reference groups. Conclusively, this study appoints that seeking social interactions can be considered a factor for people to decide whether or not to participate in carsharing (Burckhardt & Milliard-Ball, 2006; Nica & Potcuvaro, 2015; Kim et al., 2015; Hamari et al., 2016; Kathan et al., 2016).
2.4.5 Life-style Factor
In general, a sharing economy contradicts with the status quo of our ‘consumption’ society in which it is normal to own everything you have, as mentioned in Bamberg (2014) and Loose (2010). Truffer (2003) even suggests cars are deeply embedded in our social and cultural systems, a car signals social status and it is an expression of one’s identity. However, it seems that younger generations are deviating more from this status quo than older individuals. This can be argued by the growing awareness of sustainability, but also by the more open to innovative solutions, for example pay-per-use or end of ownership models. Kuhnimhof et al. (2011) shows that mainly young, urban consumers are supporters of carsharing practices. Research from Havas Worldwide (2014) also shows that especially young individuals [age of 16-34] are more open to pay-per-use models and leaving ownership behind. 46% of the respondents agreed with the opinion ‘I prefer to share things rather than own them’ (Havas Worldwide, 2014). Additionally, Efthymiou et al. (2013) suggests young people [under the age of 26] are less reluctant in relation to older generations in their willingness to participate in carsharing. Therefore, as Beene (2007) implies, carsharing could face an increasing amount of users regarding the largely untapped potential of the increasing amount of individuals with less interest in car ownership. We can carefully conclude that this life-style factor plays a role in the adoption of carsharing. Although this is, like the factor environmental awareness, an intrinsic personal motive that can be considered very hard to influence. Nonetheless, this factor is important to keep in mind (Truffer, 2003; Schaefers, 2013; Kim et al., 2015).
2.4.6. Trust Factor
Trust mainly plays a role in P2P sharing practices. Since B2C carsharing does not entail a significant difference in terms of trust in relation to for example car rental, P2P sharing systems do significantly differentiate from existing rental services (Kim et al., 2015). Users of P2P sharing practices voluntarily participate, hereby they directly share goods with other on the basis of trust (Kim et al., 2015). Peer trust and reputation are considered as the main drivers in a P2P sharing economy platform (Botsman & Rogers, 2010; Lamberton & Rose, 2012; Schor & Fitzmaurice, 2014). Currently, the third party [the sharing platform] is the guarantee for a smooth and insured P2P rental period (Botsman, 2015). Trust reduces the perceived risk involved in sharing services (Lamberton & Rose, 2012), it mediates the relationship between trust and the intention to share (Kim et al., 2015). The trust factor can be separated in two pillars; trust and reputation. Wang & Vassileva (2003) defines trust as ‘a peer’s belief in another peer’s capability, honesty and reliability based on its own direct experiences’. Whereas reputation is defined as ‘a peer’s belief in another peer’s capability, honesty and reliability based on recommendations’ (pp. 150). If a P2P share practice will be arranged with a stranger, it will initially assess the trustworthiness by the reputational record provided by the sharing platform. Whenever this is accepted, often there occurs a second assessment while consigning the keys of the car, here the user can test the other peer on their appearance. Nonetheless, the various methods sharing platforms provide regarding the enlargement of trust between peers [by rating systems and reputational records] and on top of that the ensured guarantee in the case of a mishap, it will retain a certain extent of risk. Especially in the sharing of valuable goods [e.g. carsharing or home sharing]. For instance, recently a car has not been returned to the owner by intention in the use of a carsharing practice. By the use of the P2P carsharing platform Snappcar, a malicious individual rented a very valuable car with his family, while premediated to sell the car far below actual value (van der Meer & de Schipper, 2018). Although Snappcar as third party will cover the loss with the insurance, it will only compensate for the current value. Leaving behind an inconsolable user and negative publicity among potential users (van der Meer & de Schipper, 2018).
Since the fundament of the P2P sharing economy is based on the presence of trust along peers, this factor can be considered important in the total proposition of a carsharing practice (Botsman & Rogers, 2010; Lamberton & Rose, 2012; Schor & Fitzmaurice, 2014; Kim et al., 2015; Möhlmann, 2015).
This section will elaborate on the characteristics of the P2P carsharing business model. The literature review has addressed many perspectives of studies on the aspects of several business models in the sharing economy. In order to visualise the current business model used in the P2P carsharing industry, theory among platforms and network effects will be used.
The core of a P2P model, as the name suggests, is connecting people to exchange services or products for value. This model has become increasingly popular and often occurs via platforms. Many sharing platforms have been growing lately, mainly due to the progression in ICT which has brought them many opportunities. As Belk (2014) puts it; ‘sharing is a phenomenon as old as humankind, while collaborative consumption and the sharing economy are phenomena born of the internet of age’ (p. 1595). As Hamari et al. (2016), Kamilaris & Prenafeta-Boldú (2017), Matzler et al. (2015) and Heinrichs (2013) suggested, due to the increased development of ICT, sharing practices were able to grow. Pazaitis et al. (2017) also states the ICT revolution has enabled new capacities for communication and sharing. Kaplan & Haenlein (2010) argues that the development among ICT and the growth of the internet enabled online platforms that promote sharing. Hamari et al. (2016) formulates CC even including the persistent use of an online platform. The rise of the internet can be seen as the first big boost that enabled the sharing economy to grow, by the immense step the internet offered in the exchange of information many sharing economy business models became reality through these platforms. This new way of information exchange enabled many companies to start P2P business models using this platform approach.
A platform is a product or service that brings together two groups of users in a two-sided market (Eisenmann et al., 2006). The platform provides the infrastructure that facilitates the interactions between the two groups of users, in this case the car owners and the car users. Two-sided markets differ from traditional markets in one fundamental way; in a traditional value chain, the value moves from the left to the right, where the left is the company’s cost and the right is the company’s revenue (Eisenmann et al., 2006). In these platforms [two-sided markets] cost and revenue are both to the left and the right, the platform incurs cost and collects revenue at both sides (Eisenmann et al., 2006). This entails successfully getting both distinct sides on board in order to extract profits from their interactions, leading to the classic ‘chicken-and-egg problem’ of which group to subsidise (Rochet & Tirole, 2003). As Cusumano (2015) mentions, these platform-based P2P networks can grow exponentially through the power of platform dynamics and network effects. Network effects influence users’ ‘willingness to participate’, these network effects can either be positive or negative as mentioned in Gladwell (2006). If a network effect is positive, this means a large user base is appealing for users [e.g. telephones, the more people who own a telephone, the higher the utilisation rate]. On the other side, when a network effect is negative, users will have reducing interest if the user base increases [e.g. exclusive fashion items]. These [positive] network effects are also named same-side network effects (Eisenmann et al., 2006) and are commonly known as Metcalfe’s Law, originated in the early 1980s by Bob Metcalfe who suggested that the value of a service increases as the number of users increase because the potential links increases for all users if a new user joins the network (Hendler & Golbeck, 2008). Next to same-side network effects, Gladwell (2006) also describes cross-sided network effects. This involves the effects of when one distinct group of users grow, which attracts more willingness to participate by the group on the other side [e.g. if the amount of Amazon users grow, this will attract businesses willing to sell their products on Amazon].