The Tragedy of Your Upstairs Neighbors: Is the Airbnb Negative Externality Internalized?

John J. Horton

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arXiv · 1611.05688

The Tragedy of Your Upstairs Neighbors: Is the Airbnb Negative Externality Internalized?

John J. Horton

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Abstract

A commonly expressed concern about the rise of the peer-to-peer rental market Airbnb is that hosts---those renting out their properties---impose costs on their unwitting neighbors. I consider the question of whether apartment building owners will, in a competitive rental market, set a building-specific Airbnb hosting policy that is socially efficient. I find that if tenants can sort across apartments based on the owners policy then the equilibrium fraction of buildings allowing Airbnb listing would be socially efficient.

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John J. Horton. 2015-12-16. The Tragedy of Your Upstairs Neighbors: Is the Airbnb Negative Externality Internalized?. https://arxiv.org/abs/1611.05688

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