Estimating the impact of Airbnb on the local economy: Evidence from the restaurant industry

Abstract

We study the effect of Airbnb on restaurant revenue in the state of Texas using a difference in difference strategy that exploits the geographical and temporal variation of Airbnb’s entry in Texas to show that a 1% increase in Airbnb listings is associated with a 0.01% increase in restaurant revenue. Moreover, this increase is revenue is driven, at least in part, by an increase in restaurant demand. Finally, we show that the positive effect of Airbnb is more pronounced for independent restaurants and less commercial—and therefore with less economic activity—zipcodes. Overall, our results provide evidence that home-sharing platforms like Airbnb can increase economic activity for businesses and in neighborhoods that are more likely to need it most.

Keywords: Sharing Economy, Peer-To-Peer Markets, Airbnb, Restaurant Revenue, Local Economy