Economic Impacts of Platform-Endorsed Quality Certification: Evidence from Airbnb

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Publication History

Received: June 19, 2020
Revised: January 21, 2022; September 1, 2022
Accepted: November 26, 2022
Published Online as Articles in Advance: August 22, 2023
Published in Issue: September 1, 2023

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We contribute to the emerging literature on quality certification by digital platforms by studying the launch of the Airbnb Plus service, wherein the platform inspects properties and provides a badge that presumably signals the quality of the property and the reliability of the host. Our identification strategy relies on the fact that the Airbnb Plus service was launched in different cities at different times, and listings within the cities received the certification at different times. Using a staggered difference-in-differences estimation strategy in conjunction with suitable matching methods, we found that the Airbnb Plus certification increased the weekly booking rate of Plus listings by about 6.8% on average (direct effect). We also found some evidence that non-Plus listings saw a temporary decline in booking rate when one or more nearby properties received a Plus certification (externality effect). The net impact of the Airbnb Plus service on the platform itself was an annual increase in revenue of about $37,500 for the average 2-kilometer zone in a U.S. city that included one or more Plus listings, as compared to matched zones without any Plus listings (local platform effect). We performed additional analyses, including a randomized experiment, to demonstrate the robustness of our findings. Overall, our results suggest that platform-endorsed quality certification has significant economic impacts—not just on the listings that receive the certification but on other listings on the platform as well as on the platform itself.

Additional Details
Author Sanjeev Dewan, Jooho Kim, and Tingting Nian
Year 2023
Volume 47
Issue 3
Keywords Sharing economy, quality uncertainty, quality certification, externality
Page Numbers 1353-1368
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