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

57 Pages Posted: 3 Feb 2020 Last revised: 19 Apr 2021

See all articles by Suman Basuroy

Suman Basuroy

University of Texas at San Antonio - College of Business

Yongseok Kim

The University of Texas at San Antonio

Davide Proserpio

Marshall School of Business, University of Southern California

Date Written: July 7, 2020

Abstract

In this paper, 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 diffusion in Texas, we show that a 1% increase in Airbnb reviews in a zipcode is associated with a 0.011% increase in restaurant revenue in the same zipcode. Considering the median annual Airbnb growth in each zipcode, this result implies that Airbnb can explain about 12% of the median annual restaurant revenue growth. Moreover, we show that this increase in revenue is driven by an increase in restaurant demand that stems from additional tourism demand generated by Airbnb. Finally, we show that the positive effect of Airbnb is more pronounced for independent restaurants and in 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 the most.

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

Suggested Citation

Basuroy, Suman and Kim, Yongseok and Proserpio, Davide, Estimating the impact of Airbnb on the local economy: Evidence from the restaurant industry (July 7, 2020). Available at SSRN: https://ssrn.com/abstract=3516983 or http://dx.doi.org/10.2139/ssrn.3516983

Suman Basuroy

University of Texas at San Antonio - College of Business ( email )

San Antonio, TX 78249
United States

Yongseok Kim (Contact Author)

The University of Texas at San Antonio ( email )

ONE UTSA Circle
San Antonio, TX 78249
United States

Davide Proserpio

Marshall School of Business, University of Southern California ( email )

701 Exposition Blvd
Los Angeles, CA Los Angeles 90089
United States

HOME PAGE: http://dadepro.github.io/

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