Job market paper
Platform Competition and Product Differentiation in Two-Sided Markets: Insights from the Vacation Rental Industry
For antitrust authorities and policymakers, understanding what drives competition between platforms in two-sided markets is essential, particularly since interactions between players differ from traditional markets. To further this understanding, this paper investigates the relationship between product differentiation and platform competition in the vacation rental industry. I collect and analyze a large data set of vacation rental properties in coastal cities of North Carolina, where product differentiation arises from variables such as the number of bedrooms and whether the property is oceanfront or not. I introduce and estimate a choice model tailored to the vacation rental markets, accounting for how each consumer’s decision influences the subsequent consumer’s choice set. Using the estimated model, I evaluate how changes in the level of product differentiation affect the platform market concentration under varied market conditions.