Groupe d’études et de recherche en analyse des décisions

Short-term rentals: Pricing strategy of sharing platforms and its implications

Han Zhu Université McGill, Canada

In recent years, we have seen the emergence of a number of platforms that facilitate short-term peer-to-peer rentals of assets as part of the bigger collaborative consumption or shared services movement. Although all platforms are similar in that their primary goal is to facilitate asset sharing, they differ in other aspects. In this paper, we focus on one such aspect - how they decide on the price to charge their customers. Specifically, in a platform like AirBnB, the price is effectively set based on a market mechanism that matches supply and demand. But, some other platforms like and are more active. They take turnkey control of the assets and determine the price on "behalf" of the owners that maximizes their profits based on them being paid a share of the price. Our primary goal in this paper is to understand the implications of this difference in pricing strategy for the direct stakeholders of the platform such as customers, owners and the platform as well as indirect stakeholders such as long-term rentals and hotels.

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