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In this Paper, we discuss the central benefit of the sharing economy thus far: it has overcome market imperfections without recourse to regulatory bodies prone to capture by entrenched firms. As an introduction to the various issues surrounding this ongoing debate, we begin with an explanation of the sharing economy. Then we review the traditional “consumer protection” rationales for economic regulation and explain why many regulations persist even though their initial justifications are no longer valid. We argue continued application of these outmoded regulatory regimes is likely to harm consumers. In the last section, we explain how the Internet and information technology alleviate the need for much of this top-down regulation and are likely to do a better job of serving consumers. We conclude with some proposals for further research in this area and call for a more informed regulatory approach that accounts for the innovations of the sharing economy. When market circumstances change dramatically--or when new technology or competition alleviate the need for regulation--then public policy should evolve and adapt to accommodate these new realities.

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