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

Jian Jia, Ginger Zhe Jin and Liad Wagman

No 28878, NBER Working Papers from National Bureau of Economic Research, Inc

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.

JEL-codes: D81 D83 L14 L15 (search for similar items in EconPapers)
Date: 2021-06
New Economics Papers: this item is included in nep-ind and nep-pay
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