Deregulation and the Sharing Economy Hammond and Knott (1988) write, “Even more threatening to regulatory stability is economic or technological change which produces a new competitor on some unregulated fringe of the industry. This new competitor may be able to take business away from the regulated firms by undercutting their price or by offering services which they cannot offer. The regulated firms here are even worse off than firms in a voluntary cartel because they are not allowed to respond to the competitor by lowers their (regulated) prices… The regulated firms may thus become more and more desperate for either an extension of regulation to the competitor or a relaxation of regulations so that they can compete” (p.10). Hammond and Knott (1988) continue by claiming that there are two possible responses to this instability: either to extend regulation to the new technologies or to ease the rules for the regulated firms or complete deregulation. Consider the case of either Uber or Airbnb, both new entrants to highly regulated industries that, by virtue of technological change, exist on an “unregulated fringe” of the industry. Select either of these cases, conduct some of your own background research on the nature of the firm, the nature of their competition, the regulations that their competition must comply with, and the current debate taking place over whether and how to regulate these industries. Instructions Post the following: Post an initial response of 200-300 word (maximum) to the Discussion Board that addresses the following questions: What are the political/intellectual reasons and the economic reasons that Hammond and Knott suggest lead to deregulation? How do regulated industries, in general, benefit from regulations? In what ways was the regulated industry in the case you chose (either the taxi industry or the hotel industry) benefiting from regulation? With regard to the case you chose (either Uber or Airbnb), how did the firms arise on an “unregulated fringe” of the industry and how were they able to avoid complying with the regulations that competitors faced? How did traditionally regulated firms (such as the taxi industry or the hotel industry) respond to these new market entrants? Given the various factors that impact the likelihood of either extension of regulation to the new firm or the easing of regulations for the old firms, which response seems to be taking place with regard to the case you chose? How might Hammond and Knott explain why, in this case, the government is attempting to either expand regulations to include the new firm or ease regulations for the old firm? In 5 years, how do you expect regulation in this industry to evolve? Will Uber or Airbnb function as members of the regulated industry or will deregulation of the industry occur? Explain the logic behind your prediction (This is your own prediction – there is no right or wrong answer).