Should Digital Platforms Share Data with Governments? Evidence from Airbnb

Abstract

We study whether and how data transparency policies, in the form of data sharing between digital platforms and governments, affect user participation and the associated market outcomes of the platforms. Advocates argue that digital platforms cannot be well governed without regulators having access to their data, while critics express concerns about government surveillance and costs over obtaining access to platform data. Adding evidence to the debate, we investigate a unique program launched by the largest short-term rental platform Airbnb in several U.S. cities that allows local governments to access the platform’s transaction-level data. We highlight three key findings. First, we find that the program reduced overall supply on Airbnb, with the number of listings decreasing by about 5.2% in program-affected markets relative to unaffected markets, while the total revenue remained largely unchanged. Second, these impacts can be attributed to host exits and deterred entrance because of heightened non-compliance costs and privacy concerns about platform data sharing, which is especially evident among listings of higher quality. Lastly, we document interesting heterogeneity in program impacts, calling for customized data transparency policies. Our findings contribute to the heated discussions on data sharing between digital platforms and governments and provide implications for regulators and platform stakeholders.

Keywords: Platform governance, data transparency, data sharing, digital platforms, short-term rentals