Cleanin’ It Up: Unshrouding Hidden Fees on a Peer-to-Peer Platform

Kevin D. Tran, Leonardo Madio, Michelangelo Rossi and Mark J. Tremblay

Bristol Economics Discussion Papers from School of Economics, University of Bristol, UK

Abstract: We examine how greater price transparency affects pricing behavior in peer-to-peer markets. When Airbnb began displaying cleaning fee-inclusive prices to European users in response to EU regulation, hosts who had not charged fees raised their base prices by 67%, especially when competitors used cleaning fees. These adjustments arise because transparency changes how sellers perceive competitors’ prices: when fees are hidden, inattentive hosts benchmark only visible base prices; once fees are unshrouded, they realize competitors were effectively charging more. In contrast, hosts already charging cleaning fees reduce them by about 1.5%, particularly when serving more EU travelers. Transparency thus reduces price obfuscation for consumers but can increase prices for previously transparent sellers, revealing that regulatory efforts to enhance transparency may have unintended redistributive effects in decentralized markets.

Date: 2025-04-02
New Economics Papers: this item is included in nep-eur, nep-pay and nep-reg
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Persistent link: https://EconPapers.repec.org/RePEc:bri:uobdis:25/798

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