This paper considers intermediation in a di_erentiated short-term housing market where heterogeneous agents may stay at a hotel or at one of several private hosts' properties, below or above hotel quality. The collaborative-housing market fails when agents' hidden actions are noncontractable. If expected liability is not excessive, a trusted intermediary can induce agents to exert first-best effort and fully insure the hosts' risks, without subsidizing the transactions. The intermediary can also extract the hosts' surplus if their outside option is zero; somewhat counter-intuitively, the commission on either side of the transactions does not affect agents' equilibrium payoffs. The optimal commission structure makes direct transactions between hosts and renters unattractive.
Boris Thurm, Charles Chadi Ayoubi