Working Paper: NBER ID: w28878
Authors: Jian Jia; Ginger Zhe Jin; Liad Wagman
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.
Keywords: Airbnb; cancellation policies; platform competition; pro-guest rules
JEL Codes: D81; D83; L14; L15
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| platform competition (L17) | influence on the effects of Airbnb's cancellation rule (Z38) |
| pre-existing conditions of listings (L85) | influence on demand effect of Airbnb's cancellation rule (D16) |
| Airbnb's 48-hour cancellation rule (Z38) | higher prices for Airbnb listings (R21) |
| Airbnb's 48-hour cancellation rule (Z38) | higher occupancy rates for Airbnb listings (R21) |
| Airbnb's 48-hour cancellation rule (Z38) | increased guest demand for Airbnb (R22) |
| Airbnb's 48-hour cancellation rule (Z38) | decreased total number of active Airbnb listings (Z30) |
| Airbnb's 48-hour cancellation rule (Z38) | lowered service quality among hosts (L15) |