So we should allow a contract killer for hire on-line marketplace because drug cartels would really love to book their preferred hit man from an iPhone app?
The goal should be to update regulations to reflect modern reality, not destroy the massive value created by these new services (and an array of future services) by applying rigid century old hotel/taxi regulations and pigeon-holing them onto tech companies. Or punishing workers with labour and social welfare laws from a past time when everyone was in an employee/employer relationship rather than contractors.
Grey markets are almost always a reaction to inefficient, out of date, or unintended side effects of state intervention. India's economy crashing after removing the currency is a perfect example of this, it exposed a massive grey market which existed due to their famously heavy handed government policies [1] [2]. Or when anatomy research was exploding in popularity in the 1890's and access to cadavers was limited by government policy to the bodies of prisoners and orphans, leading to a massive black market of grave diggers and murders, which only stopped when the policy was updated, despite broad enforcement effort [3].
Sometimes grey markets are good for society while slow moving regulatory and judicial systems catch up to modern economic reality. Sometimes they're disastrous (see: drug war). But you can't put the rabbit back in the basket, so the sooner common ground is found the better.
[1] https://www.youtube.com/watch?v=hVwIZzGHxwc
[2] http://www.bbc.com/news/world-asia-india-35610332
[3] https://en.wikipedia.org/wiki/Burke_and_Hare_murders#Anatomy...
I agree with you that grey markets can show an inherent problem with a regulatory regime and should be viewed as providing useful information. That being said, people will always break the law, that doesn't, by itself mean there should be no law, the question is what is the right balance given the competing objectives.
But I think your examples are excellent. Regulation can definitely go to far, have unintended consequences, and create real social harm. The problem is that what is ok changes over time; right now we are comfortable with using cadavers for research, but society was not at the time due to certain beliefs in place. Perhaps we will have a similar change with stem cell research in the future such that some of the current restrictions will seem similarly antiquated. But to say that both were inherently irrational is not a fair reading of facts or history. My point is that its good to debate what regulation is beneficial and revisit the debate regularly.
There will always be a tension here, regulation to protect social interests, and freedom to allow individual commerce, and that is ok, society should always reevaluate its structure as should any organization. I am merely reacting against the impulse to eliminate ALL regulations or say that business models that ignore relevant regulations are valid and superior.
For the record, I am actually a big fan of AirBnB, and use it regularly. I support their mission, I just think we have to be honest about the sources of their success, a part of which is a unique, better product, but a part of which is due to regulatory arbitrage. If we are not honest, we cant learn from what they have done and replicate it in other sectors. If my company takes the same approach in health care, I would go to jail, so why should we encourage this mind set for others reading hacker news?
That being said, as you point out, we should look at the benefit and harm of a policy, if existing business are harmed that is a relevant factor. I think it is reasonable, that has a general and universal rule, companies should operate under the same set of rules. The difficulty is that AirBnB, may not fit into existing categories of an industry and regulatory framework. So how do we determine which set of rules to apply, or whether any should? How do we determine what a company is doing that is subject to regulation?
Perhaps a good starting point is to look and the product/service and customer segment. Thus, where two companies are providing an interchangeable good/service, to the same customer segment, they seem to be direct competitors and as such, I think it is reasonable to apply the same rules or we are allowing one party to benefit from regulatory arbitrage.
