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The Impact of Sharing Economy: Evidence from Airbnb and Taiwanese Hotel Industry

This paper investigates the impact of sharing economy focusing on the entry of Airbnb in Taiwan. Combining listing information scraped from Airbnb and a data set with detailed hotel performance metrics, we first quantify the impact of Airbnb’s entry hotel revenues using difference-in-difference approach, and find approximate 3% decrease in revenue per available room. We also find that hotels delay major investments in response to Airbnb’s entry. We further estimate a discrete choice logit demand model following Berry (1994) to analyze the impact of Airbnb on consumer demand. The empirical results show that the effect of Airbnb is equivalent to 3% of the average daily rate, or 50.5 NT$. ∗Department of Economics, National Chung Cheng University. Email: fckuo@ccu.edu.tw †Master Student at National Chung Cheng University. Email: c1109123@gmail.com