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Demand for in-app purchases in mobile apps—A difference-in-difference approach

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  • Enache, Andreea
  • Friberg, Richard
  • Wiklander, Magnus

Abstract

Using five “freemium” mobile app games on six European markets we examine the effect of price changes on conversion rate, number of users and viewing of rewarded videos. Our difference-in-difference estimation relies on games being available on both the Apple and Google platforms with price changes on only one platform. Our main identification comes from exogenous adjustments of Apples prices in 2021. Own-price elasticities of conversion are in the -1 to -4 range. Watching of rewarded videos decreases as in-app prices decrease with an average elasticity of around 0.5, but overall play is not affected by changes in-app prices.

Suggested Citation

  • Enache, Andreea & Friberg, Richard & Wiklander, Magnus, 2023. "Demand for in-app purchases in mobile apps—A difference-in-difference approach," International Journal of Industrial Organization, Elsevier, vol. 88(C).
    • Handle: RePEc:eee:indorg:v:88:y:2023:i:c:s0167718723000279
    DOI: 10.1016/j.ijindorg.2023.102945
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    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L82 - Industrial Organization - - Industry Studies: Services - - - Entertainment; Media

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