This paper investigates the impact of the platform economy on the transition of the labor market, with a specific focus on crowdworking platforms. It aims to bridge the gap in the existing literature by assessing the effectiveness of government policies in addressing the challenges and opportunities presented by the platform economy. The study explores both the positive direct effects, such as job creation and increased labor market participation and the negative direct and indirect effects, including job insecurity and environmental externalities. Through a comprehensive literature review and policy analysis, the paper evaluates the role of government interventions in maximizing the positive outcomes and mitigating the negative consequences of the platform economy. Key findings indicate that while the platform economy facilitates flexible work arrangements and employment opportunities, it also necessitates robust policy measures to ensure job security, social protection, and environmental sustainability. The study demonstrates the validity and value of framing the impacts of platform-based labor market transitions as externalities of commerce that can be managed by municipal and federal policies and tools.