To Share or Not to Share? Assessing the Impact of Algorithmic Regulation in a Peer-to-Peer Market

Sharing markets have been associated with several unintended consequences, and policymakers have formulated a range of interventions. As a response, platform-owners resort to a wide range of strategies. We examine the impact of algorithmic regulation on both matchings, as well as market exit in the largest home-sharing market using a quasi-natural experiment. We find that algorithmic regulation led to both a decrease in matches, as well as an increase in the likelihood of market exit for the affected listings. We provide evidence that not all listings experience same effects; listings owned by hosts who own reputation badges experience a greater drop in matches. In contrast, we find that listings owned by hosts who own reputation badges are not highly likely to exit the market than other listings. We discuss the ability of sharing platforms to exercise control over market design, as well as implications for policymakers and market designers