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

51 Pages Posted: 23 Feb 2018 Last revised: 1 Feb 2022

See all articles by Shunyuan Zhang

Shunyuan Zhang

Harvard University - Business School (HBS); Harvard University

Dokyun Lee

Boston University - Questrom 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, 2020

Abstract

We examine whether and how ride-sharing services influence the demand for home-sharing services. Our identification strategy hinges on a natural experiment in which Uber/Lyft exited Austin, Texas, in May 2016 due to local regulation. Using a 12-month longitudinal dataset of 11,536 Airbnb properties, we find that Uber/Lyft’s exit led to a 14% decrease in Airbnb occupancy in Austin. In response, hosts decreased the nightly rate by $9.3 and the supply by 4.5%. We argue that when Uber/Lyft exited Austin, the transportation costs for most Airbnb guests increased significantly because most Airbnb properties (unlike hotels) have poor access to public transportation. We report three key findings: First, demand became less geographically dispersed, falling (increasing) for Airbnb properties with poor (excellent) access to public transportation. Second, demand decreased significantly for low-end properties, whose guests may be more price-sensitive, but not for high-end properties. Third, the occupancy of Austin hotels increased after Uber/Lyft’s exit; the increase occurred primarily among low-end hotels, which can substitute for low-end Airbnb properties. The results indicate that access to affordable, convenient transportation is critical for the success of home-sharing services in residential areas. Regulations that negatively affect ride-sharing services may also negatively affect the demand for home-sharing services.

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

Suggested Citation

Zhang, Shunyuan and Lee, Dokyun and Singh, Param Vir and Mukhopadhyay, Tridas, Demand Interactions in Sharing Economies: Evidence from a Natural Experiment Involving Airbnb and Uber/Lyft (January 14, 2020). Available at SSRN: https://ssrn.com/abstract=3124712 or http://dx.doi.org/10.2139/ssrn.3124712

Shunyuan Zhang

Harvard University - Business School (HBS) ( email )

Soldiers Field Road
Morgan Hall
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United States

Harvard University ( email )

1875 Cambridge Street
Cambridge, MA 02138
United States

Dokyun Lee

Boston University - Questrom School of Business ( email )

595 Commonwealth Avenue
Boston, MA MA 02215
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

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