Platform as a Rule Maker: Evidence from Airbnb's Cancellation Policies

61 Pages Posted: 24 May 2021

See all articles by Jian Jia

Jian Jia

Illinois Institute of Technology - Stuart School of Business

Ginger Zhe Jin

University of Maryland - Department of Economics; National Bureau of Economic Research (NBER)

Liad Wagman

Rensselaer Polytechnic Institute (RPI) - Lally School of Management & Technology

Multiple version iconThere are 2 versions of this paper

Date Written: May 24, 2021

Abstract

Digital platforms are not only match-making intermediaries but also establish internal rules that govern all users in their ecosystems. To better understand the governing role of platforms, we study two Airbnb pro-guest rules that pertain to guest and host cancellations, using data on Airbnb and VRBO listings in 10 US cities. We demonstrate that such pro-guest rules can drive demand and supply to and from the platform, as a function of the local platform competition between Airbnb and VRBO. Our results suggest that platform competition sometimes dampens a platform wide pro-guest rule and sometimes reinforces it, often with heterogeneous effects on different hosts. This implies that platform competition does not necessarily mitigate a platform's incentive to treat the two sides asymmetrically, and any public policy in platform competition must consider its implication on all sides.

Keywords: Platform competition; Airbnb; VRBO; sharing economy

JEL Classification: D81, D83, L14, L15

Suggested Citation

Jia, Jian and Jin, Ginger Zhe and Wagman, Liad, Platform as a Rule Maker: Evidence from Airbnb's Cancellation Policies (May 24, 2021). Available at SSRN: https://ssrn.com/abstract=3851754 or http://dx.doi.org/10.2139/ssrn.3851754

Jian Jia

Illinois Institute of Technology - Stuart School of Business ( email )

Stuart Graduate School of Business
565 W. Adams St. 4th floor
Chicago, IL 60661
United States

Ginger Zhe Jin

University of Maryland - Department of Economics ( email )

College Park, MD 20742
United States
301-405-3484 (Phone)
301-405-3542 (Fax)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Liad Wagman (Contact Author)

Rensselaer Polytechnic Institute (RPI) - Lally School of Management & Technology ( email )

110 8th St
Troy, NY 12180
United States

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