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Airbnb, Hotels, and Localized Competition

Author

Listed:
  • Maximilian Schaefer

    (Institut Mines-Télécom Business School, Department of Law, Economics and Finance, 9 rue Charles Fourrier, 91000 Evry, France)

  • Kevin Ducbao Tran

    (University of Bristol, School of Economics, 12 Priory Road, Bristol BS8 1TU, United Kingdom)

Abstract

We analyze competition between hotels and Airbnb listings as well as the effect of Airbnb on consumer welfare, hotel profits, and Airbnb host surplus. For this purpose, we use granular daily-level data from Paris for the year 2017. We estimate a random coefficient logit model of demand. We extend prior research by accounting for the localized nature of competition within districts of the city. Our results suggest that demand is segmented by district as well as accommodation type. Based on these demand estimates, we estimate separate supply-side models for hotels and Airbnb, to account for differences in price setting we observe in the data. Using the estimated models, we assess how Airbnb affects hotel profits and consumer welfare and how much Airbnb hosts value the platform. Our simulations imply that Airbnb increases average consumer surplus and decreases hotel profits substantially. Airbnb hosts seem to value the platform moderately.

Suggested Citation

  • Maximilian Schaefer & Kevin Ducbao Tran, 2023. "Airbnb, Hotels, and Localized Competition," Working Papers 23-04, NET Institute.
    • Handle: RePEc:net:wpaper:2304
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    Cited by:

    1. is not listed on IDEAS
    2. Nicola Fontana, 2025. "Who is my neighbour? Short-term renting and civic engagement in London," Trinity Economics Papers tep0525, Trinity College Dublin, Department of Economics.
    3. Lam, Chungsang Tom & Liu, Meng & Hui, Xiang, 2021. "The geography of ridesharing: A case study on New York City," Information Economics and Policy, Elsevier, vol. 57(C).
    4. Gonçalves, Duarte & Peralta, Susana & Pereira dos Santos, João, 2022. "Short-Term Rental Bans and Housing Prices: Quasi-Experimental Evidence from Lisbon," IZA Discussion Papers 15706, Institute of Labor Economics (IZA).
    5. Jin, Ginger Zhe & Wagman, Liad & Zhong, Mengyi, 2024. "The effects of short-term rental regulation: Insights from Chicago," International Journal of Industrial Organization, Elsevier, vol. 96(C).
    6. Ismael Gálvez-Iniesta & José L. Groizard & Ferran Portella-Carbó, 2023. "Sharing my place: the local labor market impact of the P2P technology shock," DEA Working Papers 97, Universitat de les Illes Balears, Departament d'Economía Aplicada.

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    Keywords

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    JEL classification:

    • D4 - Microeconomics - - Market Structure, Pricing, and Design
    • D6 - Microeconomics - - Welfare Economics
    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
    • Z38 - Other Special Topics - - Tourism Economics - - - Policy

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