ESSAYS ON SHARING ECONOMY AND REGULATION

Abstract

The rapid expansion of the sharing economy has created both economic opportunities and regulatory challenges. As policymakers increasingly implement regulations to balance the interests of diverse stakeholders, understanding the outcome of regulatory enforcement becomes crucial. This dissertation examines the efficacy and efficiency of short-term rental regulations through three complementary studies. The first chapter investigates how short-term rental regulations affect housing markets. The second chapter analyzes the impact of Chicago’s short-term rental ordinance on individual hosts, professional hosts, local residents, and hotels. The third chapter explores the distributional impact of New York City’s stringent short-term rental regulations on different stakeholders. Chapter 1. Equilibrium Effect of Short-term Rental Regulations on the Housing MarketThe growth of the short-term rental (STR) market has ignited policy debates about regulating STR. Despite the growing trend for enforcing STR regulations, it remains unclear whether these STR regulations, with the intention to address the affordable housing crisis, achieve their goals. This chapter examines the effectiveness of STR regulations in addressing rental housing affordability concerns and offers policy recommendations in terms of effective STR policies that can encourage the conversion from the STR market back to the long-term rental market. By comparing cities with and without STR regulations, I find that property owners frequently convert their listings to mid-term rentals (MTR) rather than returning properties to the LTR market after the regulation enforcement. Through difference-in-differences analyses across cities and within Chicago’s neighborhoods, I find that while STR regulations produce modest reductions in rental prices for some property types, their overall impact on housing affordability remains limited. To evaluate alternative regulatory approaches, I develop a structural model of property allocation decisions across the LTR, STR, and MTR markets. Counterfactual simulations reveal that tax- based interventions targeting only STR generate substantial MTR conversions, undermining the effectiveness of STR policies. In contrast, imposing fixed fees on all temporary rentals that affect both STR and MTR can increase LTR supply more efficiently. Chapter 2. The Effects of Short-Term Rental Regulation: Insights from Chicago (with Ginger Jin and Liad Wagman)We provide an in-depth study of short-term rental (STR) regulation in Chicago. While many municipalities choose between outright bans or laissez-faire strategies concerning STR activities, Chicago pioneered a middle-ground ordinance, enabling the market to exist with limitations and registrations, and imposing a new tax. We show that compared to three control cities, the number of active Airbnb listings in Chicago declined 16.4% in the two years after the ordinance, but this effect is only significant after the city began receiving detailed data feeds from STR platforms. We further demonstrate (i) localized reductions in burglaries near buildings that prohibit STR listings as part of a new capability of the ordinance, (ii) Airbnb revenues declined more in zip codes with above-median hotel revenues, and (iii) Chicago’s middle ground approach generated different and nuanced effects on different STR stakeholders, including the city itself in terms of its STR tax revenues. Chapter 3. Heterogeneous Impact of New York City Local Law 18, (with Ginger Jin and Liad Wagman)Effective September 2023, New York City’s Short-Term Rental Registration Law, also known as Local Law 18 (LL18), aims to discourage short-term rental (STR) listings and in- crease the supply of long-term rentals (LTR) for local residents. This chapter analyzes the impact of LL18 on both STR hosts and the LTR market. Our preliminary results indicate that the STR regulation has disproportionally affected the house-sharing market in low-income regions. After LL18, Airbnb listings in census tracts with below-median household income are 6.9% less likely to remain as active STR listings than those in above-median-income census tracts. However, listings in lower-income communities are more likely to transit from STR to mid-term rentals (MTR) after the law is enforced. These findings suggest that both proponents and critics of NYC STR regulation may have overstated certain impacts of LL18 while overlooking MTR as an alternative to simultaneously skirt LL18 and stay out of the LTR market. While the anticipated benefits for housing affordability have not been observed in the short term, comprehensive economic consequences for different stakeholders require further analysis.