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The Determinants of Supply and Demand for Mobile Applications

Author

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  • Michael Sinkinson

    (The Wharton School, University of Pennsylvania)

Abstract

Since 2008, multiple smartphone platforms have launched versions of “app stores”, marketplaces where consumers can purchase and download software applications for their smartphone. This paper provides evidence for both demand and supply of “apps” using data on the size and composition of smartphone user bases and of the apps available for competing platforms. Results from the estimation of a structural model show that the composition of users on a platform is a key determinant of app supply, and counterfactual simulations show that this effect is greater than the effects of within-platform competition and multi-homing costs in explaining the observed market outcome.

Suggested Citation

  • Michael Sinkinson, 2012. "The Determinants of Supply and Demand for Mobile Applications," Working Papers 12-27, NET Institute.
    • Handle: RePEc:net:wpaper:1227
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    File URL: http://www.netinst.org/Sinkinson_12-27.pdf
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    References listed on IDEAS

    as
    1. Marc Rysman & Gautam Gowrisankaran & Minsoo Park, 2011. "Measuring Network Effects in a Dynamic Environment," Boston University - Department of Economics - Working Papers Series WP2011-061, Boston University - Department of Economics.
    2. Daniel A. Ackerberg & Gautam Gowrisankaran, 2006. "Quantifying equilibrium network externalities in the ACH banking industry," RAND Journal of Economics, RAND Corporation, vol. 37(3), pages 738-761, September.
    3. Farrell, Joseph & Klemperer, Paul, 2006. "Coordination and Lock-In: Competition with Switching Costs and Network Effects," Competition Policy Center, Working Paper Series qt9n26k7v1, Competition Policy Center, Institute for Business and Economic Research, UC Berkeley.
    4. Daniel Ackerberg & Gautam Gowrisankaran, 2006. "Quantifying Equilibrium Network Externalities in the ACH Banking Industry," RAND Journal of Economics, The RAND Corporation, vol. 37(3), pages 738-761, Autumn.
    5. Matthew Gentzkow & Jesse M. Shapiro & Michael Sinkinson, 2014. "Competition and Ideological Diversity: Historical Evidence from US Newspapers," American Economic Review, American Economic Association, vol. 104(10), pages 3073-3114, October.
    6. Marc Rysman, 2004. "Competition Between Networks: A Study of the Market for Yellow Pages," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 71(2), pages 483-512.
    7. Farrell, Joseph & Klemperer, Paul, 2007. "Coordination and Lock-In: Competition with Switching Costs and Network Effects," Handbook of Industrial Organization, in: Mark Armstrong & Robert Porter (ed.), Handbook of Industrial Organization, edition 1, volume 3, chapter 31, pages 1967-2072, Elsevier.
    Full references (including those not matched with items on IDEAS)

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    Keywords

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    JEL classification:

    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
    • L86 - Industrial Organization - - Industry Studies: Services - - - Information and Internet Services; Computer Software
    • L96 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Telecommunications

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