Creating trust when public institutions are weak? A qualitative analysis of sharing institutions

We extend theories of sharing institutions in contexts of strong public institutions to analyze sharing institutions in contexts of weak public institutions. We posit that when weak public institutions suppress mutually beneficial exchange in service, labor and credit markets, sharing institutions can overcome these obstacles by creating trust on sharing markets. Drawing on qualitative data from a ride-sharing platform in Monterrey, Mexico, we find sharing institutions to enable mutually beneficial exchange in service-, credit- and labor-market relationships. First, we provide a fine-grained analysis of how sharing institutions can overcome these trust problems using rules and rule-enforcement mechanisms, including the monitoring, disclosure, and sanctioning mechanisms embedded in payment, feedback, admission and screening, loan financing, and pricing rules. Second, we find risks being associated with a lack of competition on platforms and between platforms, and political elites interfering with sharing institutions in an effort to create rents.