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Network effects on the iPhone platform: An empirical examination

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  • Garcia-Swartz, Daniel D.
  • Garcia-Vicente, Florencia

Abstract

Smartphones are “systems,” that is, collections of (hardware and software) components that work well with one another. They can also be viewed as multi-sided platforms that connect two or more distinct types of customers (users, application developers, handset manufacturers, network operators, and advertisers) and are characterized by the existence of indirect network effects—an extra customer on one side generates benefits for customers on the other side. In this study we focus on one specific aspect of the growth dynamics of Apple׳s iPhone: the feedback effects between users and applications (or application developers). After briefly tracing the history of the iPhone, we construct time series of users and apps. We then carry out cointegration analysis and estimate dynamic OLS (DOLS) and vector error correction models (VECM). We find evidence of indirect network effects of a substantial magnitude.

Suggested Citation

  • Garcia-Swartz, Daniel D. & Garcia-Vicente, Florencia, 2015. "Network effects on the iPhone platform: An empirical examination," Telecommunications Policy, Elsevier, vol. 39(10), pages 877-895.
    • Handle: RePEc:eee:telpol:v:39:y:2015:i:10:p:877-895
    DOI: 10.1016/j.telpol.2015.07.011
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