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The effects of short-term rental regulation: Insights from Chicago

Author

Listed:
  • Jin, Ginger Zhe
  • Wagman, Liad
  • Zhong, Mengyi

Abstract

We provide an in-depth study of short-term rental (STR) regulation in Chicago. While many municipalities choose between outright bans or laissez-faire strategies concerning STR activities, Chicago pioneered a middle-ground ordinance, enabling the market to exist with limitations and registrations, and imposing a new tax. We show that compared to three control cities, the number of active Airbnb listings in Chicago declined 16.4% in the two years after the ordinance, but this effect is only significant after the city began receiving detailed data feeds from STR platforms. We further demonstrate (i) localized reductions in burglaries near buildings that prohibit STR listings as part of a new capability of the ordinance, (ii) Airbnb revenues declined more in zip codes with above-median hotel revenues, and (iii) Chicago's middle ground approach generated different and nuanced effects on different STR stakeholders, including the city itself in terms of its STR tax revenues.

Suggested Citation

  • Jin, Ginger Zhe & Wagman, Liad & Zhong, Mengyi, 2024. "The effects of short-term rental regulation: Insights from Chicago," International Journal of Industrial Organization, Elsevier, vol. 96(C).
    • Handle: RePEc:eee:indorg:v:96:y:2024:i:c:s0167718724000420
    DOI: 10.1016/j.ijindorg.2024.103087
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    Cited by:

    1. Seungbee Choi & Sunghwan Kim, 2024. "Impact of COVID-19 Pandemic on Airbnb Listings in New York City: Challenges and Opportunities for Urban Housing Sustainability," Sustainability, MDPI, vol. 16(20), pages 1-18, October.

    More about this item

    Keywords

    Short-term-rental; Regulation; Digital platform; Airbnb; Data sharing;
    All these keywords.

    JEL classification:

    • K23 - Law and Economics - - Regulation and Business Law - - - Regulated Industries and Administrative Law
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • L86 - Industrial Organization - - Industry Studies: Services - - - Information and Internet Services; Computer Software
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets

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