Department of Economics

This tax-incidence analysis examines the shift in remittance obligations of those participatingin the short-term rental marketplace, AirBnB. Theory would argue that the levying of a tax on supplier or consumer has no effect on the share of the tax burden they incur. This concept sadly goes out the window as the possibility for evasion presents itself. Through the implementation of a difference-in-differences analysis, it is possible to examine the effect of stabilizing the remittance responsibility by shifting the collection of taxes away from users and onto the platform itself. While no concrete evidence of evasion is found, the policy change results in a greater cost to consumers and contradicts theoretical expectation.