The Welfare Effects of Airbnb

How AirBnB helps consumers save money

13 mins

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What is it about?



The internet has democratised access to many industries by reducing the entry costs. Peer-to-peer marketplaces such as Etsy, Uber and AirBnB provide peer providers to sell their products and services. This paper studies the welfare effects of peer production in the market for short-term accommodations, where Airbnb is the main player and hotels are incumbent suppliers.
Key difference between hotels and peer hosts is that hotels have a fixed supply of rooms all year round whereas, peer hosts have other uses for these rooms and can are flexible as to when they rent out depending on the demand.