The Effects of Sharing Economy

The existence of sharing economy has greatly changed people’s life. Airbnb, one of the most successful startups of the sharing economy has transformed the entire lodging industry. Although it has many positive effects on tourism, Airbnb seriously undermined the market order of hotel and rental housing market and triggers an increasingly acrimonious debate on short-term rentals (STRs). Since there is a limited number of empirical studies exploring how housing market is influenced by home sharing, this research focusing on New York City assesses the impacts of Airbnb on rental housing market through regressing zipcode level rental prices and housing affordability on Airbnb density. By using control variables to increase the accuracy of the results of regressions, this paper finds that a 1% increase in Airbnb density leads to 5.9% in rents and 10.1% affordability.