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Digital Matching Firms: A New Definition in the “Sharing Economy” Space

Office of the Chief Economist SealIncreasingly, consumers and independent service providers are engaging in transactions facilitated by an Internet-based platform. The digital firms that provide the platforms are often collectively referred to as belonging to the "sharing" or "collaborative" economies, among other descriptors. However, in this paper, we narrow the focus and propose a definition of "digital matching firms" that exhibit the following characteristics:

  1. They use information technology (IT systems), typically available via web-based platforms, such as mobile "apps" on Internet- enabled devices, to facilitate peer-to-peer transactions.
  2. They rely on user-based rating systems for quality control, ensuring a level of trust between consumers and service providers who have not previously met.
  3. They offer the workers who provide services via digital matching platforms flexibility in deciding their typical working hours.
  4. To the extent that tools and assets are necessary to provide a service, digital matching firms rely on the workers using their own.

In addition to defining these "digital matching services" the report offers an initial assessment of its size and scope based on publicly available data on its largest firms, as well as an examination of its potential effect on consumers and service providers. The report closes with an overview of the benefits and challenges emerging from the growth of these firms.

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