Regulating Short-Term Rental Platforms: Where, How and in the Interest of Whom?

This paper analyses the impact of short-term rental platforms on the housing market and tourism industry. We develop a theoretical model to explore the effects of platform entry on different segments of the housing market and tourism industry, depending on the attractiveness of a destination and the socio-economic composition of its population. We show that in highly attractive destinations, quantitative restrictions on short-term rentals are effective in protecting students and low-income tenants from being crowded out of the rental market. However, in destinations with strong seasonality, taxation may be a better solution to mitigate the negative effects of the platform. On the other hand, in less attractive destinations, quantitative restrictions are less effective, and taxation can provide a better solution to protect hoteliers and middle-class families. Our results provide policymakers with effective guidelines to regulate short-term rental platforms and their impacts on different segments of the housing market and tourism industry.