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  • April 2022
  • Article
  • Journal of Marketing Research (JMR)

Demand Interactions in Sharing Economies: Evidence from a Natural Experiment Involving Airbnb and Uber/Lyft

By: Shunyuan Zhang, Dokyun Lee, Param Singh and Tridas Mukhopadhyay
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Abstract

We examine whether and how ride-sharing services influence the demand for home-sharing services. Our identification strategy hinges on a natural experiment in which Uber/Lyft exited Austin, Texas, in May 2016 due to local regulation. Using a 12-month longitudinal dataset of 11,536 Airbnb properties, we find that Uber/Lyft’s exit led to a 14% decrease in Airbnb occupancy in Austin. In response, hosts decreased the nightly rate by $9.3 and the supply by 4.5%. We argue that when Uber/Lyft exited Austin, the transportation costs for most Airbnb guests increased significantly because most Airbnb properties (unlike hotels) have poor access to public transportation. We report three key findings: First, demand became less geographically dispersed, falling (increasing) for Airbnb properties with poor (excellent) access to public transportation. Second, demand decreased significantly for low-end properties, whose guests may be more price-sensitive, but not for high-end properties. Third, the occupancy of Austin hotels increased after Uber/Lyft’s exit; the increase occurred primarily among low-end hotels, which can substitute for low-end Airbnb properties. The results indicate that access to affordable, convenient transportation is critical for the success of home-sharing services in residential areas. Regulations that negatively affect ride-sharing services may also negatively affect the demand for home-sharing services.

Keywords

Airbnb; Uber; Natural Experiment; Geographic Demand Dispersion; Sharing Economy; Transportation; Demand and Consumers; Geographic Scope

Citation

Zhang, Shunyuan, Dokyun Lee, Param Singh, and Tridas Mukhopadhyay. "Demand Interactions in Sharing Economies: Evidence from a Natural Experiment Involving Airbnb and Uber/Lyft." Journal of Marketing Research (JMR) 59, no. 2 (April 2022): 374–391.
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About The Author

Shunyuan Zhang

Marketing
→More Publications

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  • Frontiers: Can an AI Algorithm Mitigate Racial Economic Inequality? An Analysis in the Context of Airbnb By: Shunyuan Zhang, Nitin Mehta, Param Singh and Kannan Srinivasan
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