I am pretty sure recessions will at least be good for ridesharing companies, since they will get more drivers, which will lower driver pay. Since they can treat the prices consumers are willing to pay as sticky, this could help them solve profitability issues. I am not sure how much a recession would affect demand or consumers' willingness to spend on ridesharing though, but I think overall a recession is actually good for ridesharing
For Airbnb, it's a bit harder to say. More people will probably try to airbnb their places out, which will bring average costs down but increase the supply a lot. Demand may also increase as people unfortunately may turn to short term housing due to being in financially precarious situations. Since it's theorized that the American dollar will strengthen in the recession, this could also boost Airbnb's presence in international markets
Wework will probably gain too. More unemployment probably means more people trying to work out of weworks in startups or as freelancers. For the buildings they rent from non-executives, they could see a lower rent which would also help profitability.
So in summary I think the sharing economy is actually going to do ok. What do people do when they're unemployed? They try to make ends meet, and that means participating in the sharing economy
I'm not convinced a recession would be good for ridesharing companies. In a lot of places today, using Uber or Lyft is significantly more expensive than driving yourself on a per-mile basis, and way more expensive than alternatives like public transit. In a recession scenario where people are losing jobs and tightening personal budgets, it's pretty easy to envision a lot of people taking a hard look at their rideshare expenditures and either deciding to use an alternative or just not go out places nearly as often.
It depends a lot on how much ridesharing companies pass on any labor cost decreases to consumers, and consumers' demand curves.
Personally, my ridesharing use is a mix of relatively inelastic demand and elastic demand. Inelastically I am almost always going to use ridesharing to get to/from the airport, go places in other cities where I don't have a car and public transportation is too complex to figure out. I will usually use ridesharing if it is significantly faster and only $10 or so more expensive compared to public transportation that I can figure out. The only thing I would really reduce is using ridesharing to go out drinking - but if that becomes significantly cheaper, maybe not
Totally agree, I just think that on average, the net result in a recession will be less rideshare usage, even with lower costs. For example, people are probably more likely to ask a friend/family member to take them to the airport in a recession scenario than they are today. If you've lost your job, a $20 ride can be a significant expense for a large portion of potential customers.
For Airbnb, it's a bit harder to say. More people will probably try to airbnb their places out, which will bring average costs down but increase the supply a lot. Demand may also increase as people unfortunately may turn to short term housing due to being in financially precarious situations. Since it's theorized that the American dollar will strengthen in the recession, this could also boost Airbnb's presence in international markets
Wework will probably gain too. More unemployment probably means more people trying to work out of weworks in startups or as freelancers. For the buildings they rent from non-executives, they could see a lower rent which would also help profitability.
So in summary I think the sharing economy is actually going to do ok. What do people do when they're unemployed? They try to make ends meet, and that means participating in the sharing economy