Short-Term Housing Rentals and Corporatization of Platform Pricing
Problem Definition: Online short-term house rental platforms, which traditionally matched individual owners with individual customers (P2P), has recently experienced an influx of corporate players on the supply side controlling multiple assets. Our goal is to understand the implications of this phenomenon (corporatization) for relevant stakeholders.Academic/Practical Relevance: We show that the potential change in the pricing strategy as a result of corporatization has a significant impact on the asset supply to the platform, occupancy rate of the listed assets and the platform price. Our analysis also suggests that it will result in capacity loss in the long-term rental market that is of concern to policymakers.Methodology: We develop two game-theoretical models to capture the differences between P2P and corporate pricing strategies and employ the rational expectation concept to characterize the equilibrium. Subsequent comparison of the two models enables us to understand the implications of corporatization.Results: We identify two factors that determine asset owners' incentives to join the platform: (i) a short-term supply-demand mismatch between the two sides of the platform (owners and visitors) that creates occupancy risk for the asset; and (ii) the relative profit potential of the platform compared to the long-term rental channel. We show that the change in the pricing strategy due to the entry of corporate players (i) increases the asset supply to the platform; (ii) leads to higher asset prices and lower asset utilization; and (iii) increases profits for asset owners and decreases surpluses for consumers. We validate some of our findings with real-life data and extend our model in various ways to show that our results are relatively robust.Managerial Insights: This paper highlights the possible effects of the entry of corporate players on both the direct (i.e., customers, owners, platform provider) and indirect (i.e., hotels and long-term rental channels) stakeholders of an online house-sharing platform. It also suggests how the platform provider should change its strategy in the face of this phenomenon and how policymakers can most effectively deal with it so that the long-term rental channel is not too adversely affected
Year of publication: |
2019
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Authors: | Zhu, Han |
Other Persons: | Gumus, M. (contributor) ; Ray, Saibal (contributor) |
Publisher: |
[2019]: [S.l.] : SSRN |
Subject: | Immobilienpreis | Real estate price | Korporatismus | Corporatism | Miete | Rent | Wohnungsmarkt | Housing market | Mietwohnung | Rental housing |
Saved in:
freely available
Extent: | 1 Online-Ressource (51 p) |
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Type of publication: | Book / Working Paper |
Language: | English |
Notes: | Nach Informationen von SSRN wurde die ursprüngliche Fassung des Dokuments February 28, 2019 erstellt |
Other identifiers: | 10.2139/ssrn.3344260 [DOI] |
Source: | ECONIS - Online Catalogue of the ZBW |
Persistent link: https://www.econbiz.de/10012891541
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