Shared Lodging and Customer Preference: Theory and Empirical Evidence from Airbnb
35 Pages Posted: 10 Mar 2018 Last revised: 7 Jul 2020
Date Written: July 3, 2020
An important difference between lodging sharing economy marketplaces (e.g., Airbnb) and traditional hotels is that the guest may be sharing the property with a local host. While shared properties are on average cheaper compared to listings where the guest occupies the entire (and hence larger) space of the property, guests may derive non-price utilities from the shared living feature. In this paper, we show that guests may derive utility from shared lodging above and beyond the price savings, and that this utility has meaningful implications on the sharing economy. Using Airbnb as a relevant application, we first provide the empirical evidence that an exogenous shock that changes the guests' desire for shared living has a direct bearing on listing transactions. We then theoretically investigate the implications of such a customer preference for shared living on the sharing economy platform and the social planner.
Keywords: sharing economy; Airbnb; causal inference; natural experiment; price competition model
JEL Classification: C23, D03, D4, D6, L83, M21, M31, O35
Suggested Citation: Suggested Citation