TheRiseoftheSharingEconomy: EstimatingtheImpactofAirbnbontheHotelIndustry? GeorgiosZervas QuestromSchoolofBusiness BostonUniversity DavideProserpio,JohnW.Byers ComputerScienceDepartment BostonUniversity Lastrevised: June9,2016 Firstdraft: December14,2013 Abstract Peer-to-peermarkets, collectivelyknownasthesharingeconomy, haveemergedas alternative suppliers of goods and services traditionally provided by long-established industries. Acentralquestionregardsthe impact ofthesesharingeconomyplatforms onincumbent?rms. WestudythecaseofAirbnb,speci?callyanalyzingAirbnb’sentry intotheshort-termaccommodationmarketinTexasanditsimpactontheincumbent hotelindustry. We?rstexploreAirbnb’simpactonhotelrevenue,byusingadi?erence- in-di?erencesempiricalstrategythatexploitsthesigni?cantspatiotemporalvariationin thepatternsofAirbnbadoptionacrosscity-levelmarkets. WeestimatethatinAustin, where Airbnb supply is highest, the causal impact on hotel revenue is in the 8-10% range;moreover,theimpactisnon-uniformlydistributed,withlower-pricedhotelsand thosehotelsnotcateringtobusinesstravelersbeingthemosta?ected. We?ndthatthis impactmaterializesthroughlessaggressivehotelroompricing,animpactthatbene?ts allconsumers,notjustparticipantsinthesharingeconomy. Theimpactonhotelprices isespeciallypronouncedduringperiods ofpeakdemand,suchasSXSW.We?ndthat byenablingsupplytoscale–adi?erentiatingfeatureofpeer-to-peerplatforms–Airbnb hassigni?cantlycrimpedhotels’abilitytoraisepricesduringperiodsofpeakdemand. Our work provides empirical evidence that the sharing economy is making inroads bysuccessfu