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; Digital 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

    • June 2022
    • American Economic Review

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

    By: Chiara Farronato and Andrey Fradkin
    • March 2022
    • Faculty Research

    Telepass: From Tolling to Mobility Platform

    By: Chiara Farronato
    • 2022
    • Faculty Research

    Consumer Reviews and Regulation: Evidence from NYC Restaurants: Evidence from NYC Restaurants

    By: Chiara Farronato and Georgios Zervas
More from the Authors
  • The Welfare Effects of Peer Entry in the Accommodation Market: The Case of Airbnb and the Accommodation Industry By: Chiara Farronato and Andrey Fradkin
  • Telepass: From Tolling to Mobility Platform By: Chiara Farronato
  • Consumer Reviews and Regulation: Evidence from NYC Restaurants: Evidence from NYC Restaurants By: Chiara Farronato and Georgios Zervas
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
  • Accessibility
  • Digital Accessibility
Copyright © President & Fellows of Harvard College