Working Paper: NBER ID: w22029
Authors: John J. Horton; Richard J. Zeckhauser
Abstract: New Internet-based markets enable consumer/owners to rent out their durable goods when not using them. Such markets are modeled to determine ownership, rental rates, quantities, and surplus generated. Both the short run, before consumers can revise their ownership decisions, and the long run, in which they can, are examined to assess how these markets change ownership and consumption. The analysis examines bringing-to-market costs, such as labor costs and transaction costs, and considers the operating platform’s pricing problem. A survey of consumers broadly supports the modeling assumptions employed. For example, ownership is determined by individuals’ forward-looking assessments of planned usage.
Keywords: sharing economy; peer-to-peer markets; rentals; Airbnb; Uber; bringing-to-market costs; transaction costs
JEL Codes: D23; D47; L1
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Technological advancements (O33) | Emergence of p2p rental markets (D16) |
| Development of reputation systems (Z13) | Emergence of p2p rental markets (D16) |
| Introduction of p2p rental markets (D16) | Overall surplus (H62) |
| Increased rental opportunities (R21) | Decrease in ownership (long run) (G32) |
| Bringing-to-market costs (D40) | Market existence (D40) |
| Expected usage (C88) | Ownership likelihood (G32) |