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

Abstract

The authors examine whether and how ride-sharing services influence the demand for home-sharing services. Their 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 data set of 11,536 Airbnb properties, they find that Uber/Lyft's exit led to a 14% decrease in Airbnb occupancy in Austin. In response, hosts decreased the nightly rate by $9.30 and the supply by 4.5%. The authors 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. The authors 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.