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Publications
Publications
  • 2016
  • Working Paper

Pros vs Joes: Agent Pricing Behavior in the Sharing Economy

By: Jun Li, Antonio Moreno and Dennis J. Zhang
  • Format:Print
  • | Language:English
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Abstract

One of the major differences between markets that follow a “sharing economy” paradigm and traditional two-sided markets is that the supply side in the sharing economy often includes individual nonprofessional decision makers, in addition to firms and professional agents. Using a data set of prices and availability of listings on Airbnb, we find that there exist substantial differences in the operational and financial performance of professional and nonprofessional hosts. In particular, properties managed by professional hosts earn 16.9% more in daily revenue, have 15.5% higher occupancy rates, and are 13.6% less likely to exit the market compared with properties owned by nonprofessional hosts, while controlling for property and market characteristics. We demonstrate that these performance differences between professionals and nonprofessionals can be partly explained by pricing inefficiencies. Specifically, we provide empirical evidence that nonprofessional hosts are less likely to offer different rates across stay dates based on the underlying demand patterns, such as those created by major holidays and conventions. We develop a parsimonious model to analyze the implications of having two such different host groups for a profit-maximizing platform operator and for a social planner. While a profit-maximizing platform operator should charge lower prices to nonprofessional hosts, a social planner would charge the same prices to professionals and nonprofessionals.

Keywords

Two-sided Market; Sharing Economy; Behavioral Economics; Revenue Management; Hospitality; Two-Sided Platforms; Price; Behavior; Experience and Expertise

Citation

Li, Jun, Antonio Moreno, and Dennis J. Zhang. "Pros vs Joes: Agent Pricing Behavior in the Sharing Economy." Michigan Ross School of Business Working Paper, No. 1298, August 2016.
  • SSRN

About The Author

Antonio Moreno

Technology and Operations Management
→More Publications

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    • March 2023
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    Majid Al Futaim: Adapting the Shopping Mall to the Digital Era

    By: Antonio Moreno and Gamze Yucaoglu
    • March 2023
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    Mirakl: Growing The Marketplace Economy

    By: Antonio Moreno, Santiago Gallino and Emilie Billaud
    • February 2023
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    Adyen: Reshaping the Payment Ecosystem

    By: Marco Di Maggio, Antonio Moreno and Elena Corsi
More from the Authors
  • Majid Al Futaim: Adapting the Shopping Mall to the Digital Era By: Antonio Moreno and Gamze Yucaoglu
  • Mirakl: Growing The Marketplace Economy By: Antonio Moreno, Santiago Gallino and Emilie Billaud
  • Adyen: Reshaping the Payment Ecosystem By: Marco Di Maggio, Antonio Moreno and Elena Corsi
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