Regulation and Market Structure : An Investigation of Airbnb’s Decline in San Francisco

This paper explores the effects of municipal regulations of home-sharing websites on market structure and prices. I build on existing theoretical work on peer-to-peer markets to explain why entry regulation increases concentration and prices by disproportionately driving low capacity suppliers to exit. I then study the 2018 enforcement of regulations in San Francisco following the city's settlement with Airbnb using a difference-in-differences (DD) approach. I find that single-listing hosts are 19.7 percent less likely to list following regulation compared to a 7.8 percent decline for multi-listing hosts. I also find that nightly pre-tax prices increase by $9.25 and cleaning fees rise by $1.91