Ruckus in the Rentals, Seeking New Arrangements: Remedying the Impact of Home-Sharing on Urban Noise

Drawing underutilized residential assets into the tourism economy, home-sharing platforms create tremendous economic value for their owners and users. They also, however, generate negative externalities. This study examines the impact of home-sharing property use on an externality that has been increasingly understood to have adverse consequences for human health and well-being—noise. Based on empirical analyses using a large sample of transactions from a popular platform, we show that property use increases noise, which adversely affects neighbors. More interestingly, we show that the increase in noise is mitigated when property use is spatially or temporally concentrated. Our analyses reveal that a high concentration of property use can enhance the effectiveness of deterrence created through enforcement action against noise complaints. We further conduct empirically informed simulation experiments and propose a nudging algorithm that helps platforms mitigate noise externalities while also fulfilling user preferences and maintaining revenue growth. Contributing to the burgeoning literature on platform externalities, our work highlights the need for further research on potential complementarities between platform and regulatory governance and provides platforms with an alternative approach to the reputationally expensive guest penalties for addressing noise externalities.