ABSTRACT
The rise of Airbnb and other forms of disruption occurring as part of the so called “sharing economy” have generated new challenges for urban planning and regulation. This paper asks whether the “Coase theorem” for addressing the problem of externalities might provide insights for addressing such challenges in addition to, or instead of, traditional forms of planning control. Focusing specifically on the manifestation of Airbnb as the largest global platform for online home-sharing, the paper identifies the range of externalities and impacts associated with different home-sharing practices under different neighbourhood and housing market contexts. It then examines the potential utility of the Coase theorem which argues that well defined property rights provide a basis for private arbitration and compensation over externalities, without the need for government intervention, to help resolve impacts arising from Airbnb style home-sharing. In particular, the paper examines whether the low transaction cost enabled by online platforms, may support new forms of bargaining and compensation as alternatives to traditional planning regulation and control, and the extent to which arbitrated solutions could address the spectrum of externalities associated with Airbnb and similar platforms. Data sources include public submissions to a 2015 government inquiry on the regulation of short term holiday accommodation (in the state of NSW, Australia), as well as a comparative analysis of the geography and scale of Airbnb listings in two distinct metropolitan and regional areas of the state (Greater Sydney and the Northern Rivers region of coastal NSW). The paper concludes that a Coasian approach might inspire more pragmatic alternatives to traditional forms of urban regulation and control but fails to address the wider spatial policy and housing market concerns associated with Airbnb style holiday rentals.
