Why Existing Regulatory Frameworks Fail in the Short-term Rental Market: Exploring the Role of Regulatory Fractures

Tedds, Lindsay M. and Cameron, Anna and Khanal, Mukesh and Crisan, Daria (2021): Why Existing Regulatory Frameworks Fail in the Short-term Rental Market: Exploring the Role of Regulatory Fractures.

Abstract

Over the past decade, home-sharing has evolved from fringe activity to encompass a booming short-term rental (STR) market of global scale. This rise has not been without criticism, as Airbnb and other STR platforms have been charged with exacerbating over-tourism, gentrification, and housing issues and engaging in anti-competitive behaviour. On the other hand, the STR market has produced benefits, sparking new activity in local economies and innovation in the travel accommodation sector. In this paper, we explore the nature, evolution, and impact of platform-mediated home-sharing to arrive at a sophisticated conceptualization of the STR market and its complications. We then use this understanding to demonstrate the ways in which existing regulatory approaches—built upon traditional ideas of market composition and dynamics—are inadequate for managing the novel STR market. In particular, we argue that attempts at regulation have been hindered in three ways: first, by a lack of attention to the diversity and complexity of the STR market; second, by a failure to conceive of STR markets as three-sided and involving the active participation of platforms; and third, by a tendency to characterize various forms of market activity as regulatory violations, when the concept of regulatory fractures—instances in which new modes of activity do not map well onto existing frameworks, disrupting regulatory effectiveness—is more apt. Ultimately, we contend that the effective management of the STR market hinges on the ability policymakers to both reconceive of the STR market and the activity that plays out within it, as well as re-imagine and innovate beyond traditional regulatory approaches. We conclude by considering ways in which regulators might begin to do so, including through a discussion of the potential of co-regulatory approaches.

• Item Type: MPRA Paper
• Language: English
• Keywords: Short-term Rental, Market Failure, Regulatory Fracture, Market Participation, Innovative Disruption, Competition, Community Impact
• Subjects: H - Public Economics > H7 - State and Local Government ; Intergovernmental Relations > H79 - Other; R - Urban, Rural, Regional, Real Estate, and Transportation Economics > R1 - General Regional Economics > R19 - Other

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