Does Airbnb Reduce Matching Frictions in the Housing Market?

Abstract

Using a search-and-matching model, we analyze Airbnb's effect on housing affordability from 2014 to 2017. We uncover a mechanism that allows market participants to wait for better matches, thereby enhancing match quality. Consistent with the literature, our results confirm that Airbnb's growth is associated with an increase in the asset value of homeownership and house prices. However, in line with the matching hypothesis, our findings also indicate that it boosts revenue streams for buyers and sellers, reduces their search costs, which leads to a decline in both the total number of sales and the probability of making a deal.

Keywords: Sharing Economy, House Prices, Matching

JEL Classification: R31, C78, L86