The Impact of Government Regulation on Sharing Platform Growth: A Channel of Supplier Behavior Change

There has been practical debates over the sharing economy and government intervention. Applying a difference-in-differences approach on Airbnb listing records in 20 U.S. cities from 2015 to 2020, we conclude a negative impact of government regulation on platform growth, through a channel of supplier behavior change. Our empirical analysis finds that implementation of license policy causes a significant decrease in the individual supplier activeness, quantified by 3.04% lower response rate, 3.22-hour longer response time and 4.71% lower acceptance rate. Subsequently, the change in behaviors leads to reduced revenue at host level and depressed booking demand, an estimate of 648 fewer requests each month, at platform level. We provide mechanisms by which the supplier-behavior channel exists, and discuss managerial implications for local policymakers and platform managers.