Skip to Main Content
HBS Home
  • About
  • Academic Programs
  • Alumni
  • Faculty & Research
  • Baker Library
  • Giving
  • Harvard Business Review
  • Initiatives
  • News
  • Recruit
  • Map / Directions
Faculty & Research
  • Faculty
  • Research
  • Featured Topics
  • Academic Units
  • …→
  • Harvard Business School→
  • Faculty & Research→
Publications
Publications
  • 2018
  • Working Paper

The Welfare Effects of Peer Entry in the Accommodation Market: The Case of Airbnb

By: Chiara Farronato and Andrey Fradkin
  • Format:Print
  • | Language:English
ShareBar

Abstract

We study the effects of enabling peer supply through Airbnb in the accommodation industry. We present a model of competition between flexible and dedicated sellers - peer hosts and hotels - who provide differentiated products. We estimate this model using data from major US cities and quantify the welfare effects of Airbnb on travelers, hosts, and hotels. The welfare gains are concentrated in locations (New York) and times (New Years Eve) when hotels are capacity constrained. This occurs because peer hosts are responsive to market conditions, expand supply as hotels fill up, and keep hotel prices down as a result.

Keywords

Peer To Peer; Market Platforms; Market Entry And Exit; Competition; Accommodations Industry

Citation

Farronato, Chiara, and Andrey Fradkin. "The Welfare Effects of Peer Entry in the Accommodation Market: The Case of Airbnb." NBER Working Paper Series, No. 24361, February 2018.
  • Find it at Harvard
  • Read Now

About The Author

Chiara Farronato

Technology and Operations Management
→More Publications

More from the Authors

    • February 2021
    • Faculty Research

    Getting Started in R Cloud Studio

    By: Chiara Farronato and Caleb Kwon
    • February 2021
    • Faculty Research

    T-tests: Theory and Practice

    By: Michael Parzen, Natalie Epstein, Chiara Farronato and Michael Toffel
    • 2020
    • Faculty Research

    Dog Eat Dog: Measuring Network Effects Using a Digital Platform Merger

    By: Chiara Farronato, Jessica Fong and Andrey Fradkin
More from the Authors
  • Getting Started in R Cloud Studio By: Chiara Farronato and Caleb Kwon
  • T-tests: Theory and Practice By: Michael Parzen, Natalie Epstein, Chiara Farronato and Michael Toffel
  • Dog Eat Dog: Measuring Network Effects Using a Digital Platform Merger By: Chiara Farronato, Jessica Fong and Andrey Fradkin
ǁ
Campus Map
Harvard Business School
Soldiers Field
Boston, MA 02163
→Map & Directions
→More Contact Information
  • Make a Gift
  • Site Map
  • Jobs
  • Harvard University
  • Trademarks
  • Policies
  • Digital Accessibility
Copyright © President & Fellows of Harvard College