Concentration and Platform Growth in the Sharing Economy: A Resource Partitioning Perspective

The emergence and growth of sharing economy platforms have engendered significant research interests recently. These platforms have witnessed increased entry of professional service providers, who have large amounts of excess assets and standardized business practices. Meanwhile, sharing economy platforms have witnessed an astounding growth, much of which is not attributed to professional service providers. This paper examines two seemingly contradictory phenomena – increased concentration among professional service providers and rapid growth of non-professionals on sharing economy platforms. Using the resource partitioning theory from the organizational literature, we explain how these two phenomena are inherently related. We further emphasize the role of income inequality that affects the resource partitioning process. The empirical analysis uses 1.4 million zip-code level Airbnb data, with Airbnb Plus policy as a natural experiment. Findings reveal that professional service provider concentration facilitates non-professional growth but reduces their performance, and the effects are significantly moderated by income inequality.