Sleeping with Strangers: Estimating the Impact of Airbnb on the Local Economy

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 10% increase in Airbnb listings is associated with a 0.05% increase in restaurant revenue. At the sample average year-over-year Airbnb growth, this translates to a 5% contribution to the average year-over-year growth in restaurant revenue. Moreover, we show that these results are driven by zipcodes traditionally not considered touristy. Our results suggest that home-sharing platforms like Airbnb can support local economies through the redistribution of travelers across different areas of the city they enter.

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