Regulating the Sharing Economy: A Law And Economy Perspective

Ms Huang Yuxin
Dr Tan Chuan Hoo, Associate Professor, School of Computing

  10 Dec 2018 Monday, 10:00 AM to 11:30 AM

 Executive Classroom, COM2-04-02


Home-sharing platforms such as Airbnb, Inc., provide digital peer-to-peer (P2P) marketplaces that allow users to rent out empty lodging space in their homes to others for the short-term. While the P2P-based short-term rental (STR) industry creates economic benefits in some respects, there are concerns about negative externalities generated. To address the concerns, there is an increasing interest in regulating the STR industry. Anchoring the research on law and economics as well as sharing economy, this research contributes to this stream of literature by empirically investigate the effects of imposing regulations on STR. Two empirical studies were conducted. The first study investigated the general effects of the STR regulation as well as the clause-level effects of the STR regulation. It was found that the regulation could prevent unqualified properties from listing on the platform. At the clause level, it is found that the clauses would vary in their effects on the STR business. In addition, the STR regulation could diverse at its effects on different types of neighborhoods. The second study investigated the role of STR regulation in adjusting the negative externalities of the STR industry and found that the effects would not last long. Additional measures should be taken to relieve these negative externalities. These studies reveal that STR regulation can be effective in the following ways. First, it could help relieve the concerns in the STR market. Second, the regulation clauses vary in their effect on the STR business. Third, the STR regulation could alleviate the consequence of STR on the long-term rental market by reducing the long-term rental (LTR) prices. However, the effects might not last long and the rental prices might finally bounce back. This ephemeral impact of STR regulation on the negative externalities implies that should city governments wish to control the STR industry, additional considerations beyond government intervention are required.