Agglomeration among competitors: Evidence of heterogeneous peer entry effect in sharing economy

Business agglomeration is a striking feature in the sharing economy due to location advantages, especially in home-sharing platforms. Listing agglomeration brings both agglomeration and localized competition effects, but it is still unclear which effect is stronger and how such effect varies with time and list heterogeneity. To answer these questions, we apply a natural experiment design to investigate the impact of peer listing entry as well as its heterogeneity using a panel dataset from a leading home-sharing platform in China. Results suggest that both agglomeration and localized competition effects exist. The impact of peer listing entry increases focal listing demand at the beginning, and the localized competitive effect dominates over time. Furthermore, listings with detailed descriptions and high reputation could keep their predominance in localized competition. Our research contributes to both agglomeration theory and sharing economy literature, and has substantial implications for listing operation and platform management