Before the law takes effect: provider anticipatory behavior

Sreyaa Guha, Katia Meggiorin and Rodrigo Belo

Nova SBE Working Paper Series from Universidade Nova de Lisboa, Nova School of Business and Economics

Abstract: What if the market impacts of platform regulation begin before the law actually takes effect? While traditional hierarchical firms manage regulatory compliance through top-down mandates, digital platforms face a distinct vulnerability: autonomous supply-side users can preemptively alter their operations, causing immediate platform revenue losses before a law is even enforced. This paper explores how Airbnb hosts respond during the critical approval-to-enforcement window of short-term rental regulation. Using listing-level data from five U.S. cities, combined with ordinance requirements, we show that hosts reduce supply immediately after regulatory approval, well before formal enforcement begins. The decline is gradual, grows as enforcement approaches, and reduces platform revenue and realized bookings. We argue that regulation approval itself makes future operating constraints credible, prompting hosts to reassess whether their current routines can continue under the incoming rules. To test this mechanism, we construct a Regulatory Risk Index that compares each listing’s pre-approval activity to the requirements of the regulation. Listings with higher regulatory risk reduce availability more strongly, especially along the margins directly targeted by regulation, such as multi-listing operation and high prior booking intensity. These early reductions also foretell post-enforcement sorting: listings that scale back more before enforcement are less likely to apply for a license and more likely to exit. Our findings show that anticipatory behavior is not merely a threat to identification or a pre-trend to be controlled away. It is a meaningful market response through which credible future regulation begins reshaping platform supply before enforcement formally starts.

Pages: 66 pages
Date: 2026
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