Digital Platforms: Regulate or Collaborate?

Recent years have been characterized by a rapid emergence of digital platforms and IT-facilitated business models, such as home-sharing portals. This development makes it possible to use goods and services more efficiently and offers extensive gains for platform providers and users. However, current market regulation does not always cover the new business models, as reflected by poor working conditions, reduced quality and safety standards, and increased opportunities to evade taxes.

Limited knowledge about how to best tackle these challenges leaves governments to “experiment” with policies, and it is still up for academic research to evaluate the effectiveness of different types of interventions. This project addresses this gap by providing guidelines for policymakers that allow societies to benefit from digital platforms while limiting negative side effects and misuse.

The analysis, first of all, studies different strategies that have been applied in different Scandinavian regions to regulate short-term rentals. In Denmark, for example, digital platforms have been collaborating with national regulatory agencies, including the reporting of personal income data to the Danish Tax Authority. Norway has instead focused on legal enforcement, whereas Sweden has not specifically targeted the new business models until now. This project evaluates how these policies have affected the home-sharing market and asks whether the effects have differed across regions, such as urban and rural municipalities. In addition, the study aims to show under which conditions collaborative agreements are more effective than legal enforcement to regulate digital platforms.