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Estimating Supply Incrementality in Two-sided Marketplaces: A Causal Machine Learning Approach

Yufei Wu, Daniel Schmierer, Dan Zylberglejd

arXiv 30 Jun 2026 · Machine Learning

arXiv:2606.30999 · PDF · DOI · OpenAlex · Extracted main text

Abstract

In two-sided marketplaces with heterogeneous products, it is important to understand the causal relationship between additional supply and marketplace outcomes, such as the total quantity transacted or transaction value in the marketplace. This paper studies a causal machine learning approach to estimating this relationship across product segments. We use the Airbnb marketplace as an example, focusing on the impact of additional listing supply on total bookings, but the methodology applies to other two-sided marketplaces. Our approach combines double/debiased machine learning with a hierarchical Bayesian framework that leverages pre-existing knowledge as priors. We construct tractable and informative features for the model by leveraging measures of product segment similarity from the geospatial literature. We find that such a model provides plausible estimates of the marketplace returns to additional supply and strong out of sample performance.

Citation extraction

12
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Most heavily cited references

The works this paper leans on most, across its whole bibliography — not restricted to papers in our corpus. Ranked by composite intensity, which combines how often a work is mentioned, how many sections mention it, and how much of that falls in the main text rather than the appendix.

ReferenceIntensityMentionsSectionsMain text
1C. Sanchez Martinez, S. O'Donnell, L. Yuan, and Y. Zhu (2025) How Airbnb measures listing lifetime value1.00073100%
2Victor Chernozhukov, Denis Chetverikov, Mert Demirer, Esther Duflo,… (2018) Double/debiased machine learning for treatment and structural parameters0.51121100%
3Patrick Baylis and Judson Boomhower (2019) Moral hazard, wildfires, and the economic incidence of natural disasters0.40511100%
4Christoph Bergmeir, Rob J. Hyndman, and Bonsoo Koo (2018) A note on the validity of cross-validation for evaluating autoregressive time series prediction0.40511100%
berry1995autounmatched citation key berry1995auto0.40511100%
6Stephen Berry, James Levinsohn, and Ariel Pakes (1995) Automobile prices in market equilibrium0.40511100%
7Kevin Credit and Matthias Lehnert (2024) A structured comparison of causal machine learning methods to assess heterogeneous treatment effects in spatial data0.40511100%
8Paul H. Douglas (1976) The Cobb-Douglas production function once again: its history, its testing, and some new empirical values0.40511100%
9Amit Gandhi and Aviv Nevo (2021) Empirical models of demand and supply in differentiated products industries0.40511100%
10Andrew Gelman and Jennifer Hill (2006) Data Analysis Using Regression and Multilevel/Hierarchical Models0.40511100%

Showing the top 10 of 13 scored citations. 1 of these could not be matched to a bibliography entry, so only the citation key is shown.