Consumers’ choice to pay with plastic and the dominance of US card giants leaves UK businesses with little choice but to pay the fees set by these networks. A recent investigation by the UK’s Payment System Regulator concluded that Mastercard and Visa do not face effective competitive constraints in the UK, as there are no alternative providers.

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One of the main objectives of the UK Financial Conduct Authority's (FCA) Business Plan 2024/2025 is to enhance its data-driven regulatory capabilities by automating analytics tools for quicker detection and response to consumer harms and collaborating with firms on safe AI deployment.

Drawing underutilized residential assets into the tourism economy, home-sharing platforms create tremendous economic value for their owners and users. They also, however, generate negative externalities. This study examines the impact of home-sharing property use on an externality which has been increasingly understood to have adverse consequences for human health and wellbeing – noise. Based on empirical analyses using a large sample of transactions from a popular platform, we show that property use increases noise which adversely affects neighbours. More interestingly, we show that the increase in noise is mitigated when property use is spatially or temporally concentrated. A high concentration of property use, our analyses reveal, can enhance the effectiveness of deterrence created through enforcement action against noise complaints. We further conduct empirically informed simulation experiments and propose a nudging algorithm which helps platforms mitigate noise externalities while also fulfilling user preferences and maintaining revenue growth. Contributing to the burgeoning literature on platform externalities, our work highlights the need for further research on potential complementarities between platform and regulatory governance and provides platforms with an alternative approach to the reputationally expensive guest penalties for addressing noise externalities.