AbstractThis paper analyzes the interaction between Airbnb and two traditional markets in New York City, long‐term rentals and hotels, to investigate whether Airbnb is a substitute to either one. Using data from InsideAirbnb, the American Community Survey (ACS), Zillow Research, and the City Planning Primary Land Use Tax Lot Output (PLUTO), we estimate three different models: (i) a fixed effect panel data model relating the number of listings to the number of hotels and socioeconomic variables; (ii) hedonic price regressions relating long‐term rents to the number of Airbnb host listings and prices; and (iii) a simultaneous equation model of supply and demand for long‐term rentals where rental supply and demand are functions of Airbnb nightly rates. We find that: (i) the numbers of host listings and guest reviews are higher in neighborhoods with higher concentration of hotels; (ii) there is a positive relationship between long‐term rents and both the number of Airbnb listings and Airbnb rates; (iii) the supply‐and‐demand simultaneous equations model shows a negative relation between the supply of properties for rent and Airbnb nightly rates; and (iv) the supply‐and‐demand simultaneous equations model shows a positive relationship between the demand for rentals and Airbnb nightly rates. These results are consistent with Airbnb being a substitute to both hotels and long‐term housing rentals.
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