The function of instant booking in Airbnb allows guests to book listings immediately without approval from hosts. Adopting instant booking will improve matching efficiency and attract more guests. However, the lack of screening may lead to potential damages, making hosts hesitant to adopt it. This study aims to address two research questions: First, after listings with varying ratings adopt instant booking, how do their listing prices, demands, and profits change? Second, what is the impact of adopting instant booking on neighboring listings? We first develop a theoretical model analyzing the impacts of adopting instant booking, then we conduct an empirical analysis to validate our analytical results. Our study provides evidence of the impacts of instant booking on its own and neighboring listings’ performance; these effects can be moderated by listing rating. We discuss the managerial implications of these findings within the context of current conversations in the sharing economy.


Paper Number 1763; Track Economics; Short Paper


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