The collaborative economy: What is it and how does it help us?

Digital media, cooperation networks and the growing concern for our consumption's impact on the planet have given rise to such new economic models as the “collaborative economy”. What does it mean? 

Meet Marta, who needs to sell a pair of shoes she no longer wears. She puts them on a second-hand marketplace app. Without realizing it, Marta is participating in the collaborative economy and will benefit from it when she sells her shoes. 

What is the collaborative economy? 

The “collaborative economy” (or “collaborative consumption”) is an economic model where consumers use new technology to provide, buy, sell, share or rent goods and services. Because new marketplaces are always emerging, it is constantly evolving. 

Examples of collaborative economy

The collaborative economy is characterized by types of systems, in particular: 

• Collaborative consumption: Users market goods and services on digital platforms that hold a wide variety of items we can buy or barter for.
• Open knowledge: Non-for-profit platforms share information that is not copyright and can be accessed by anyone at any time.
• Collaborative production: In virtual or physical spaces, people work together to help manage projects, products and services, especially in design and engineering.
• Collaborative finance: This involves social lending, savings, donations, micro-loans, collective finance and, in particular, “crowdfunding”, which is based on financial contributions from people and often used for music, art and other cultural initiatives.

Sectors in the collaborative economy

With digitalization, businesses in many sectors of the collaborative economy have flourished worldwide, especially: 

• Accommodation: There are websites that let individuals in any country share their homes. Other platforms broker vacation rentals between guests and property owners. 
• Transport: There are apps that connect drivers with passengers to ride together. 
• Second hand: Several apps sell second-hand objects, including clothing, textbooks, household appliances and other things we don’t use. 
• Food: To prevent food waste, bars, supermarkets and grocers sell packs with unsold items that they will throw away if not consumed. 

Benefits of the collaborative economy

The collaborative economy has transformed the market with new ways to do business, travel and get around town that benefit us as consumers and help our planet. 

Some major advantages of the collaborative economy are:

• Greater supply: Individuals who market goods and services increase options for people looking to travel or buy items like household appliances, clothing and bicycles.
• Savings: The items we find in collaborative consumption businesses are usually cheaper. Another benefit is that we can not only buy them with money but also trade them sometimes for other items we don't need. 
• Sustainability: This exchange between consumers increases the useful life of the items we buy. Because we reuse them, there’s no need to manufacture new things.
• Care for the environment: Choosing services like collaborative transport and giving new life to used items to prevent overproduction and use finite resources more efficiently helps us care for the environment. 

If you want to learn more about the collaborative economy and its benefits, check out this article (in Spanish) by Finanzas para Mortales (Finance for Mortals).