Economics

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Home Sharing in New York City: Impact on Hotel, Rental, and Welfare
(2019) Nguyen, Tai; Parameswaran, Giri
A major sector under the sharing economy, home sharing is a newly emerged concept. This paper explores how the growth of home sharing influences the temporary accommodation markets in New York City. Using monthly data spanning between 2015-2018 for Airbnb, I quantify the platform short- and long-term impact on hotel and rental housing. Overall, though little substitution effect is discovered between home sharing and hotel, there is evidence of strong competitive pressure. OLS regression results find a 10% increase in Airbnb supply to be associated with a 1.3% decrease in hotel price and a 1.2% decrease in hotel revenue, making the incumbent industry cheaper and less profitable. From a deadweight loss savings perspective, daily welfare benefit created by home sharing is measured around $8,000 during the period, which is not economically significant. Controlling for neighborhood and month, an increase in Airbnb supply is also found to raise median asking price across all types of rental units considered, making rental less affordable. Additionally, a hedonic regression of Airbnb listings uncovers the main price determinants of New York accommodation, including number of reviews and centrality. My paper adds to previous literature by focusing on the impact of home sharing in a large, yet understudied urban area.