Directions: Read three passages about the sharing economy. Answer the questions according to the passages. Passage A Bike-sharing startups in China sport a parade of colorful branding for their nifty-looking bikes—orange for Mobike and yellow for ofo, to name two market leaders among some 30 companies that have jumped into this sector. The race is on for dominance just as it has been with taxi-hailing services. Mobike has drawn more than $300 million from Temasek, Hillhouse Capital, Sequoia Capital and Tencent’s Xuanwu Lab. ofo, its chief rival, has attracted $450 million from Didi Chuxing and DST—not to mention a plug by Apple CEO Tim Cook, who recently visited and rode a bike at ofo. You might say, bike sharing is nothing all that new or exciting. After all, bike-sharing services have popped up in New York City and London. But the business model and technology for bike sharing in China is more advanced than in the West—one more sign of that skillful Chinese micro-innovating gene. In China, you can drop your rented bike wherever you want to instead of at an assigned docking station—thanks to GPS technology that locates and tracks the position for each bicycle. In Beijing and Shanghai, bikes are being dropped randomly at street corners, subway stations, campuses, restaurants, shopping malls and you name it. These branded bikes are starting to crowd city sidewalks so much now that talk is that government regulations could be coming to control parking of the bikes only in authorized specific zones. Just as with Uber and Didi, you can bet that this new startup craze will see price wars and battles to the finish to win—whether it’s an acquisition or an IPO (initial public offering: a company’s first stock offering to the public). Already, these bike-sharing entrants are trying out new business tactics to tackle some of the challenges of bike-sharing efficiency. On a panel I moderated recently at Peking University, Mobike CTO (Chief Technology Officer) and co-founder Joe Xia said the company is having initial success with a recently introduced red packet promotion that rewards bikers for returning their bikes to a designated parking spot. Clever! The bike-sharing services are starting to go global too—at least where flat landscapes and city density makes bicycles a popular form of transportation. Mobike is venturing outside China by entering the Singapore market. To be sure, Mobike does not have an open road—it will compete with Singapore’s own OBike, as other Asian markets begin to adapt this new startup trend. Passage B Most sharing economy websites advertise their green credentials, and many users care about their ecological impact. The ecological benefits of sharing are often seen as obvious: secondary markets reduce demand for new goods, so footprints go down. Staying in existing homes reduces the demand for new hotels just as tool-sharing reduces new tool purchases. However, despite the widespread belief that the sector helps to reduce carbon emissions, there are almost no comprehensive studies of its impact. At this point, they are long overdue. An exception is a recent study of car-sharing. It found a measurable reduction in greenhouse gas emissions, but only because of substantial reductions from a small fraction of households. For the majority, car-sharing, by expanding access to cars, increased emissions. The ordinary assumptions about ecological impacts are generally about the first, visible shifts made by a consumer—purchasing used products rather than new ones, or staying in a private home rather than a hotel. To assess overall ecological impacts, however, we have to consider ripple effects. What does the seller or the host do with the money earned? She may use the money to buy high-impact products. Does the appearance of a market for used goods lead people to buy more new things that they intend to sell later? If travel becomes less expensive, do people do more of it? All of these effects raise ecological and carbon footprints. There is also the question of impacts at the level of the economy as a whole. The platforms are creating new markets that expand the volume of commerce and boost purchasing power. The larger, for-profit companies are claiming to generate substantial business and income for their providers. If so, they are likely to create economic activity that would not have existed otherwise—more travel, more private automobile rides—and not just shifting purchasing from one type of provider to another. My students and I have found that Airbnb users are taking more trips now and that the availability of cheap ride services is diverting some people from public transportation. That means the platforms result in higher carbon emissions, because their services use energy. The companies can’t have it both ways—creating new economic activity and reducing carbon emissions—because the two are closely linked. Passage C The uniqueness of the sharing economy poses several new challenges for regulators in countries across the world. The inherent objective of regulating such sectors is to encourage competition that will eventually lead to innovation, lower costs, and better products and services. Regulators are inherently reactive, and very slow to respond to changes in the sharing economy. In the digital age, technological advancements bring increasing efficiency. However, existing regulatory organizing bodies lack coordination between the different levels of the government. The lack of a collaborative system results in confused mixes of policies that trickle down through official levels. One such example is Uber being branded as an illegal “bandit taxi-service” in the city of Ottawa. Municipal employees are not provided reimbursement if travelling by an Uber, even though their travel allowance covers licensed taxis. In the Canadian federal government, policy responses are not yet concrete even though they are aware that their own employees take Uber to get to work. Political parties have not identified an approach to regulating the sharing economy. In India, the High Court of Delhi has asked the government of India to develop guidelines for regulating taxi cab aggregators. This is an important exercise which needs to be based on real world data and also needs a simple enforcement mechanism. The more stringent the regulatory guidelines, the higher the regulatory capacity must be to monitor and enforce these guidelines. Regulation should only be changed when there is an immediate need, such as market failure. There is no such need for the sharing economy. Commercial activities in the sharing economy blur lines between the personal and professional. For example, most Airbnb hosts are not professional hoteliers, and a large fraction of Lyft and Uber drivers are not professional drivers and are only active on the platform fewer than fifteen hours per week. Applying a regulatory regime to these businesses might create an entry barrier. Absence of regulations, on the other hand, can lead to more part-time supply and that forms part of a self-regulatory solution. 14. Which of the following types of sharing economy is mentioned in all three passages? A) bike sharing B) car sharing C) tool sharing D) home sharing 15. Which of the following statements about sharing economy is TRUE according to the three passages? A) Uber, Airbnb and Mobike have been successful worldwide. B) Authority regulations are badly needed for sharing economy. C) China has become a leading country in sharing economy. D) Sharing economy brings about challenges as well as chances.