Demand Interactions in Sharing Economies: Evidence from a Natural Experiment Involving Airbnb and Uber/Lyft

31 Pages Posted: 23 Feb 2018

See all articles by Shunyuan Zhang

Shunyuan Zhang

Carnegie Mellon University - David A. Tepper School of Business

Dokyun (DK) Lee

Carnegie Mellon University - David A. Tepper School of Business

Param Vir Singh

Carnegie Mellon University - David A. Tepper School of Business

Tridas Mukhopadhyay

Carnegie Mellon University - David A. Tepper School of Business

Date Written: January 14, 2018

Abstract

The existing research has largely focused on the impact of sharing economy on incumbent industries while ignoring the interactions among sharing economies. In this study, we examine how ride sharing services such as Uber and Lyft affect the demand for home sharing services such as Airbnb. Our identification strategy hinges on a natural experiment where Uber and Lyft exited Austin in May 2016 in response to the introduction of new regulations in Austin that targeted ride sharing services. Applying the Difference-in-Difference approach on a 9-month balanced longitudinal data spanning 7,300 Airbnb properties across 7 US cities, we find that the exit of Uber/Lyft led to a decrease of 9.6% in the Airbnb property demand, which is equivalent to a decrease of $6,482 in the annual revenue to the host of an average property. We further find that the exit of Uber/Lyft reduced the (geographic) demand dispersion of Airbnb. The demand became more concentrated in areas with access to better public transportation services. Moreover, the properties farther from downtown experienced greater decreases in their demand in the absence of Uber/Lyft. The results indicate that Uber and Lyft affect the demand for Airbnb properties primarily by reducing the transportation costs to and from Airbnb properties that otherwise have poor access to transportation services.

Keywords: sharing economy, Airbnb, Uber, Lyft, sharing effects, natural experiment, geographic demand dispersion, transportation cost

Suggested Citation

Zhang, Shunyuan and Lee, Dokyun (DK) and Singh, Param Vir and Mukhopadhyay, Tridas, Demand Interactions in Sharing Economies: Evidence from a Natural Experiment Involving Airbnb and Uber/Lyft (January 14, 2018). Available at SSRN: https://ssrn.com/abstract=3124712 or http://dx.doi.org/10.2139/ssrn.3124712

Shunyuan Zhang

Carnegie Mellon University - David A. Tepper School of Business ( email )

5000 Forbes Avenue
Pittsburgh, PA 15213-3890
United States

Dokyun (DK) Lee

Carnegie Mellon University - David A. Tepper School of Business ( email )

5000 Forbes Avenue
Pittsburgh, PA 15213-3890
United States

Param Vir Singh (Contact Author)

Carnegie Mellon University - David A. Tepper School of Business ( email )

5000 Forbes Avenue
Pittsburgh, PA 15213-3890
United States
412-268-3585 (Phone)

Tridas Mukhopadhyay

Carnegie Mellon University - David A. Tepper School of Business ( email )

5000 Forbes Avenue
Pittsburgh, PA 15213-3890
United States
412-268-2307 (Phone)

HOME PAGE: http://web.gsia.cmu.edu/display_faculty.aspx?id=102

Register to save articles to
your library

Register

Paper statistics

Downloads
332
Abstract Views
1,170
rank
89,091
PlumX Metrics