The Dark Side of the Sharing Economy

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[Commentary] Proponents of the “sharing economy” say websites like Airbnb that make it easy for people to rent a spare bedroom or an apartment on a short-term basis are a boon to cities like New York and San Francisco because they generate income for residents while giving visitors a cheap place to stay.

But advocates often ignore or casually dismiss big problems with these short-term rentals, including the fact that they are making housing less affordable in big cities by restricting supply. And in some cases the rentals may be illegal, which is one reason the New York state attorney general, Eric Schneiderman, has begun an investigation.

There are good reasons that governments regulate housing. For example, officials use zoning laws to separate hotels and residential development so apartment buildings are not overrun by tourists. Rent control policies exist to help ensure that lower-income tenants have a place to live. Laws against short-term rentals make sure landlords do not operate illegal hotels and reduce the number of apartments available to permanent residents.


The Dark Side of the Sharing Economy