Examining the impact of short-term rental regulation on peer-to-peer accommodation performance: a difference-in-differences approach

ABSTRACT

On 21 October 2016, New York State Governor Andrew Cuomo signed a bill into law prohibiting advertisements for illegal short-term rentals. This study examines the impact of the regulation on the performance of peer-to-peer accommodations and offers new empirical evidence about illegal rental property listings in New York City. To achieve the study aims, a difference-in-differences technique was performed via a case study of 177,424 Airbnb listings in New York City and Washington, DC. The analyses showed that the monthly revenues of Airbnb listings that were subject to the regulation decreased in the period following the passage of the regulation, suggesting that the regulation was effective in restricting Airbnb performance. The findings can contribute to an ongoing regulatory conversation about short-term rentals and have immediate implications for state legislators.

KEYWORDS:

• Sharing economy
• Short-term rentals
• Airbnb
• Regulation effect
• Difference-in-differences (DID)

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

1. ε may contain unobserved factors such as macroeconomic impact. The DID or DDD estimator assumes that the same unobserved factors affect DC as well as NYC. Therefore, DC is comparable to NYC (i.e. the only difference is DC was not affected by the regulation). Then we can compare the change in NYC to the change in DC.

Additional information

Funding

This work was supported by The Ministry of Education of the Republic of Korea and the National Research Foundation of Korea [grant number: NRF-2019S1A3A2098438].