Regulating Professional Players in Peer-to-Peer Markets: Evidence from Airbnb

Wei Chen (), Zaiyan Wei () and Karen Xie ()
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Wei Chen: Eller College of Management, The University of Arizona, Tucson, Arizona 85721
Zaiyan Wei: Krannert School of Management, Purdue University, West Lafayette, Indiana 47907
Karen Xie: Daniels College of Business, University of Denver, Denver, Colorado 80208

Management Science, 2023, vol. 69, issue 5, 2893-2918

Abstract: We study professional players and their roles in peer-to-peer (P2P) markets. Most notably, P2P home-sharing platforms (e.g., Airbnb) consist of both professional hosts and nonprofessional individual hosts. What are the roles of the professionals? Should home-sharing platforms regulate their participation? Professional hosts may primarily offer properties that nonprofessional hosts would not supply and attract more guests—the differentiation effect. Or they may mostly supply similar properties and compete with the nonprofessionals—the competition effect. Using a unique data set of Airbnb listings, we first find that professional hosts’ properties are more expensive and have superior characteristics than nonprofessionals’. Second, we capitalize on a quasi-experiment in which Airbnb capped the number of properties a host can manage in several cities in the United States to determine the roles of professional hosts. With different predictions (about the policy impacts) under the differentiation versus competition effects, we find evidence suggesting the dominance of the latter. In particular, the policy increased the supply from nonprofessional hosts, and the price level of nonprofessional properties as a group went up after the policy. However, our findings of heterogeneity in policy impacts suggest that the dominance of competition is less prominent in certain markets. Finally, we find that the platform was not worse off in attracting reservations or securing revenue after the policy. Our findings contribute to both theory and practice as they reveal the roles of professional players and how P2P platforms can manage their participation.

Keywords: peer-to-peer markets; professional players; competition; differentiation; platform economics; Airbnb (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:inm:ormnsc:v:69:y:2023:i:5:p:2893-2918

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