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Transparency of Add-On Fees on Peer-to-Peer Platforms: Evidence from Airbnb

Author

Listed:
  • Kevin Ducbao Tran
  • Leonardo Madio
  • Michelangelo Rossi
  • Mark J. Tremblay

Abstract

This paper investigates the impact of price transparency on equilibrium prices and fees by considering a policy change implemented by Airbnb that affected the transparency of cleaning fees for IP addresses from the European Union (EU). Using a difference-in-differences approach, we find a reduction in cleaning fees of 2-4%. Consistent with our theoretical framework, we also find that listings without a cleaning fee, something that is common on Airbnb, appear more affordable after the policy change and react by increasing their nightly price by 5-6%. We argue that this result is driven by some hosts learning about the full prices of their rivals due to the transparency policy, finding themselves more affordable. This analysis uncovers a new mechanism through which greater price transparency can lead to price increases.

Suggested Citation

  • Kevin Ducbao Tran & Leonardo Madio & Michelangelo Rossi & Mark J. Tremblay, 2024. "Transparency of Add-On Fees on Peer-to-Peer Platforms: Evidence from Airbnb," CESifo Working Paper Series 11574, CESifo.
    • Handle: RePEc:ces:ceswps:_11574
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    More about this item

    Keywords

    price transparency; obfuscation; cleaning fees;
    All these keywords.

    JEL classification:

    • D40 - Microeconomics - - Market Structure, Pricing, and Design - - - General
    • D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General
    • L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General
    • L20 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - General
    • L40 - Industrial Organization - - Antitrust Issues and Policies - - - General

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