Why Existing Regulatory Frameworks Fail in the Short-term Rental Market: Exploring the Role of Regulatory Fractures

61 Pages Posted: 19 Mar 2021

See all articles by Lindsay M. Tedds

Lindsay M. Tedds

University of Calgary - The School of Public Policy; University of Calgary - Department of Economics

Anna Cameron

University of Calgary - The School of Public Policy

Mukesh Khanal

University of Calgary

Daria Crisan

University of Calgary - The School of Public Policy,

Date Written: March 18, 2021

Abstract

Over the past decade, home-sharing has evolved from fringe activity to encompass a booming short-term rental (STR) market of global scale. This rise has not been without criticism, as Airbnb and other STR platforms have been charged with exacerbating over-tourism, gentrification, and housing issues and engaging in anti-competitive behaviour. On the other hand, the STR market has produced benefits, sparking new activity in local economies and innovation in the travel accommodation sector. In this paper, we explore the nature, evolution, and impact of platform-mediated home-sharing to arrive at a sophisticated conceptualization of the STR market and its complications. We then use this understanding to demonstrate the ways in which existing regulatory approaches—built upon traditional ideas of market composition and dynamics—are inadequate for managing the novel STR market. In particular, we argue that attempts at regulation have been hindered in three ways: first, by a lack of attention to the diversity and complexity of the STR market; second, by a failure to conceive of STR markets as three-sided and involving the active participation of platforms; and third, by a tendency to characterize various forms of market activity as regulatory violations, when the concept of regulatory fractures—instances in which new modes of activity do not map well onto existing frameworks, disrupting regulatory effectiveness—is more apt. Ultimately, we contend that the effective management of the STR market hinges on the ability policymakers to both reconceive of the STR market and the activity that plays out within it, as well as re-imagine and innovate beyond traditional regulatory approaches. We conclude by considering ways in which regulators might begin to do so, including through a discussion of the potential of co-regulatory approaches.

Keywords: Short-term Rental, Market Failure, Regulatory Fracture, Market Participation, Innovative Disruption, Competition, Community Impact

JEL Classification: R19, H79, Z38

Suggested Citation

Tedds, Lindsay M. and Cameron, Anna and Khanal, Mukesh and Crisan, Daria, Why Existing Regulatory Frameworks Fail in the Short-term Rental Market: Exploring the Role of Regulatory Fractures (March 18, 2021). Available at SSRN: https://ssrn.com/abstract=3807492 or http://dx.doi.org/10.2139/ssrn.3807492

Lindsay M. Tedds (Contact Author)

University of Calgary - The School of Public Policy ( email )

Calgary, Alberta
Canada

University of Calgary - Department of Economics ( email )

University Drive
Calgary, Alberta T2N 1N4
Canada

Anna Cameron

University of Calgary - The School of Public Policy ( email )

Calgary, Alberta
Canada

Mukesh Khanal

University of Calgary ( email )

University Drive
Calgary, Alberta T2N 1N4
Canada

Daria Crisan

University of Calgary - The School of Public Policy, ( email )

Calgary, Alberta
Canada

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