Externalities of the Sharing Economy: Evidence from Ridesharing and the Local Housing Market

Abstract

This study highlights the externalities of the sharing economy on local economies. Using the introduction of Uber X as a staggered shock, I assess how ridesharing influences the local housing market through the interaction with public transit. After ridesharing’s entry, housing prices and market rents increase at the zip code level. The effect is more pronounced in locations with greater access to public transit and lower driving probability, consistent with the notion that ridesharing complements public transit. Similarly, there is a larger increase in housing prices and rents in zip codes with larger populations, lower median ages and more minorities, consistent with Uber X users’ characteristics. Also, price appreciation is strongest for houses that are just beyond walking distance to public transit, suggesting that ridesharing helps solve the “last mile” problem and redistributes the public transit premium. Overall, this study highlights the externalities of the sharing economy and provides important policy implications.

Keywords: sharing economy, housing market, last mile problem, household finance, innovation

JEL Classification: G50, O33, R31, R40