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

65 Pages Posted: 7 Jun 2021 Last revised: 26 Oct 2022

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: June 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.

Suggested Citation

Jia, Jian and Jin, Ginger Zhe and Wagman, Liad, Platform as a Rule-Maker: Evidence from Airbnb's Cancellation Policies (June 2021). NBER Working Paper No. w28878, Available at SSRN: https://ssrn.com/abstract=3861407

Jian Jia (Contact Author)

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

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

110 8th St
Troy, NY 12180
United States

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