Competition and Enforcement of Scofflaw Actors in the Sharing Economy: The Case of Airbnb

Abstract

Airbnb, a prominent sharing-economy platform, offers dwellings for short-term rent. Despite restrictions, some sellers illegally offer their accommodations, taking advantage of a degree of anonymity proffered by the platform to hide from potential enforcement. We study the extent to which enforcement works in Manhattan, one of the most active short-term rental markets, by testing the effects of two recent enforcement events. We demonstrate that prices of entire-home listings in Manhattan increase and vacancies decrease following each enforcement event, suggesting that illegal entire-home listings are being withdrawn from the market, with these effects varying depending on neighborhood characteristics. We further demonstrate that a significant portion of withdrawn listings re-enter the market under the less-enforced listing category of private rooms.