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What is the value of being a superhost?

Author

Listed:
  • Aleksander Berentsen

    (University of Basel)

  • Christopher Waller

    (Federal Reserve Bank of St. Louis)

  • Mariana Rojas Breu

    (University of Paris Dauphine)

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 more bookings and 3) higher revenue than non-Super hosts.

Suggested Citation

  • Aleksander Berentsen & Christopher Waller & Mariana Rojas Breu, 2019. "What is the value of being a superhost?," 2019 Meeting Papers 933, Society for Economic Dynamics.
  • Handle: RePEc:red:sed019:933
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    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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