Sharing economy and incumbents' pricing strategy: The impact of Airbnb on the hospitality industry

Paolo Roma, Giovanna Lo Nigro, Umberto Panniello, Giovanna Lo Nigro

Risultato della ricerca: Article

5 Citazioni (Scopus)

Abstract

In this paper, we examine how the emergence of sharing economy platforms influences incumbents' price responses. Grounding on the literature on price reactions to new entrants and on the unique characteristics of the sharing economy, we argue that the effect of the penetration of the sharing economy on incumbents' prices is not straightforward, and actually depends on the type of incumbents as well as certain product/service offer characteristics. Indeed, relying on a large sample of hotel price offerings from the Italian market, we find that the effect of the growing relevance of the sharing economy (exemplified by Airbnb) on incumbents' prices depends on the type of incumbents (low/medium-end versus high-end hotels) as well as on the accommodation period (weekend versus weekdays), and thus on the type of consumers looking for accommodation. Specifically, low/medium-end incumbents set lower prices in geographical areas where sharing economy has a higher penetration, but this occurs only for weekend accommodation search. In contrast, high-end incumbents tend to set higher prices in geographical areas where sharing economy has a higher penetration, irrespective of the accommodation period. We discuss the important implications of our findings for incumbents, sharing economy platforms, consumers, and policy makers.
Lingua originaleEnglish
pagine (da-a)17-29
Numero di pagine13
RivistaInternational Journal of Production Economics
Volume214
Stato di pubblicazionePublished - 2019

Fingerprint

Hotels
Electric grounding
Costs
Industry
Incumbents
Hospitality industry
Pricing strategy
Accommodation

All Science Journal Classification (ASJC) codes

  • Business, Management and Accounting(all)
  • Economics and Econometrics
  • Management Science and Operations Research
  • Industrial and Manufacturing Engineering

Cita questo

@article{fbaa2faf9e5e4340a3fa8102de8fe1b3,
title = "Sharing economy and incumbents' pricing strategy: The impact of Airbnb on the hospitality industry",
abstract = "In this paper, we examine how the emergence of sharing economy platforms influences incumbents' price responses. Grounding on the literature on price reactions to new entrants and on the unique characteristics of the sharing economy, we argue that the effect of the penetration of the sharing economy on incumbents' prices is not straightforward, and actually depends on the type of incumbents as well as certain product/service offer characteristics. Indeed, relying on a large sample of hotel price offerings from the Italian market, we find that the effect of the growing relevance of the sharing economy (exemplified by Airbnb) on incumbents' prices depends on the type of incumbents (low/medium-end versus high-end hotels) as well as on the accommodation period (weekend versus weekdays), and thus on the type of consumers looking for accommodation. Specifically, low/medium-end incumbents set lower prices in geographical areas where sharing economy has a higher penetration, but this occurs only for weekend accommodation search. In contrast, high-end incumbents tend to set higher prices in geographical areas where sharing economy has a higher penetration, irrespective of the accommodation period. We discuss the important implications of our findings for incumbents, sharing economy platforms, consumers, and policy makers.",
author = "Paolo Roma and {Lo Nigro}, Giovanna and Umberto Panniello and {Lo Nigro}, Giovanna",
year = "2019",
language = "English",
volume = "214",
pages = "17--29",
journal = "International Journal of Production Economics",
issn = "0925-5273",
publisher = "Elsevier",

}

TY - JOUR

T1 - Sharing economy and incumbents' pricing strategy: The impact of Airbnb on the hospitality industry

AU - Roma, Paolo

AU - Lo Nigro, Giovanna

AU - Panniello, Umberto

AU - Lo Nigro, Giovanna

PY - 2019

Y1 - 2019

N2 - In this paper, we examine how the emergence of sharing economy platforms influences incumbents' price responses. Grounding on the literature on price reactions to new entrants and on the unique characteristics of the sharing economy, we argue that the effect of the penetration of the sharing economy on incumbents' prices is not straightforward, and actually depends on the type of incumbents as well as certain product/service offer characteristics. Indeed, relying on a large sample of hotel price offerings from the Italian market, we find that the effect of the growing relevance of the sharing economy (exemplified by Airbnb) on incumbents' prices depends on the type of incumbents (low/medium-end versus high-end hotels) as well as on the accommodation period (weekend versus weekdays), and thus on the type of consumers looking for accommodation. Specifically, low/medium-end incumbents set lower prices in geographical areas where sharing economy has a higher penetration, but this occurs only for weekend accommodation search. In contrast, high-end incumbents tend to set higher prices in geographical areas where sharing economy has a higher penetration, irrespective of the accommodation period. We discuss the important implications of our findings for incumbents, sharing economy platforms, consumers, and policy makers.

AB - In this paper, we examine how the emergence of sharing economy platforms influences incumbents' price responses. Grounding on the literature on price reactions to new entrants and on the unique characteristics of the sharing economy, we argue that the effect of the penetration of the sharing economy on incumbents' prices is not straightforward, and actually depends on the type of incumbents as well as certain product/service offer characteristics. Indeed, relying on a large sample of hotel price offerings from the Italian market, we find that the effect of the growing relevance of the sharing economy (exemplified by Airbnb) on incumbents' prices depends on the type of incumbents (low/medium-end versus high-end hotels) as well as on the accommodation period (weekend versus weekdays), and thus on the type of consumers looking for accommodation. Specifically, low/medium-end incumbents set lower prices in geographical areas where sharing economy has a higher penetration, but this occurs only for weekend accommodation search. In contrast, high-end incumbents tend to set higher prices in geographical areas where sharing economy has a higher penetration, irrespective of the accommodation period. We discuss the important implications of our findings for incumbents, sharing economy platforms, consumers, and policy makers.

UR - http://hdl.handle.net/10447/359313

M3 - Article

VL - 214

SP - 17

EP - 29

JO - International Journal of Production Economics

JF - International Journal of Production Economics

SN - 0925-5273

ER -