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What is the value of being a superhost?

Author

Listed:
  • Aleksander Berentsen

    (Unibas - Université de Bâle = University of Basel = Basel Universität)

  • Mariana Rojas Breu

    (LEDa - Laboratoire d'Economie de Dauphine - Université Paris Dauphine-PSL - PSL - Université Paris sciences et lettres)

  • Christopher Waller

    (Deakin University [Burwood])

Abstract

We construct a search model where sellers post prices and produce goods of unknown quality. A match between a buyer and a seller reveals the quality of the seller. We look at the pricing decisions of the sellers in this environment. We then introduce a rating system whereby buyers reveal the seller's type by giving them a "star" if they are a high quality seller. We show that new sellers charge a low price to attract buyers and if they receive a star they post a high price. Furthermore, high quality sellers sell with a higher probability than new sellers. We show that welfare is higher with a ratings system. Using data on Airbnb rentals to compare the pricing decisions of Superhosts (elite rentals) to non-Superhosts we show that Superhosts: 1) charge higher prices, 2) have a higher occupancy rate and 3) higher revenue than non-Super hosts.

Suggested Citation

  • Aleksander Berentsen & Mariana Rojas Breu & Christopher Waller, 2019. "What is the value of being a superhost?," Post-Print hal-02315530, HAL.
    • Handle: RePEc:hal:journl:hal-02315530
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    References listed on IDEAS

    as
    1. Allen Head & Alok Kumar, 2005. "Price Dispersion, Inflation, And Welfare," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 46(2), pages 533-572, May.
    2. Chiara Farronato & Andrey Fradkin, 2018. "The Welfare Effects of Peer Entry in the Accommodation Market: The Case of Airbnb," NBER Working Papers 24361, National Bureau of Economic Research, Inc.
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    More about this item

    Keywords

    superhosts;

    JEL classification:

    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • D40 - Microeconomics - - Market Structure, Pricing, and Design - - - General
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms

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