2025/03/06 by Kaede Hanazawa, Hanazawa, Kaede
Business, Management and Accounting · Engineering · #Digital Platforms and Economics #FOS: Economics and business #General Economics (econ.GN) #Sharing Economy and Platforms #Transportation and Mobility Innovations
paper · pdf · doi:10.48550/arxiv.2503.04489
openalex publication_date 2025/03/06 · openalex created_date 2025/10/10 · openalex updated_date 2026/07/28
This paper studies the welfare effects of self-preferencing by Airbnb, a practice where Airbnb utilizes its pricing algorithm to prioritize maximizing platform-wide commission revenue rather than optimizing individual host revenues. To examine this welfare implication, I construct a Bertrand competition model with differentiated products between Airbnb hosts and hotels. Using unique data from Tokyo's 23 wards, I estimate the model and conduct counterfactual simulations to evaluate the welfare effects of self-preferencing. Counterfactual simulations reveal that self-preferencing reduces social welfare by 5.08% on average, equivalent to an annual loss of about 14.90% of Tokyo's vacation rental market size in 2023 while increasing Airbnb's commission revenue by an average of 37.73%. These findings highlight the significant trade-offs between platform-driven revenue optimization and market efficiency, emphasizing the urgent need for competition policy reforms and greater transparency and accountability in platform practices.