Working Paper #2019/35 THE AIRBNB EFFECT ON THE RENTAL MARKET: THE CASE OF MADRID1 Jorge Luis Casanova Ferrando2 UAM-Accenture Working Papers ISSN: 2172-8143 Edited by: UAM-Accenture Chair on the Economics and Management of Innovation, Autonomous University of Madrid, Faculty of Economics Editado por: Cátedra UAM-Accenture en Economía y Gestión de la Innovación E-mail:
[email protected] URL: https://www.catedrauamaccenture.com/uam-accenture-working-papers/ 1 Este documento ha sido elaborado sobre la metodología, resultados y conclusiones de la Tesina para la obtención del Grado en Económicas. Dirigido por el Prof. Juan Carlos Salazar-Elena. Mayo, 2019 2 Correo de contacto:
[email protected] ABSTRACT The debate over Airbnb is increasingly gaining attention both in academic and non- academic spheres. However, in specialized literature almost all analyses have ignored the spatial dependence behind it, that is, when landlord’s decisions to raise or keep prices are related to each other. In the City of Madrid, non-spatial and spatial regressions were compared over individual rental prices. Results suggest that traditional models were biased and, once contemplating these effects, the impact of Airbnb is no longer significant. The causes could be the lower profitability, lack of legal guarantees and a strong competition of professional hosts. As a result, there are less incentives to displace dwellings from the rental market and push rental prices up. Keywords: Airbnb, housing rents, endogeneity, spatial dependence. Table of Contents