Sleeping with strangers: Estimating the impact of Airbnb on the local economy
(A2020-64673)

AUTHORS

Yongseok Kim, The University of Texas at San Antonio; Davide Proserpio, University of Southern California; Suman Basuroy, The University of Texas at San Antonio

KEYWORDS

the sharing economy; Airbnb; spillover effect

ABSTRACT

We study the effect of Airbnb on restaurant revenue in the state of Texas. We employ a difference in difference strategy that exploits the geographical and temporal variation of the entry of Airbnb in Texas to show that a 10% increase in Airbnb listings is associated with a 0.05% increase in restaurant revenue. At the sample average year-over-year Airbnb growth, this translates to a 5% contribution to the average year-over-year growth in restaurant revenue. Moreover, we show that these results are driven by zipcodes traditionally not considered touristy. Our results suggest that home-sharing platforms like Airbnb can support local economies through the redistribution of travelers across different areas of the city they enter.