Start Date

14-12-2012 12:00 AM

Description

A fundamental change brought forth by the advent of the mobile internet has been the widespread adoption of mobile applications. We build a builds a structural model of user demand for mobile apps and jointly estimate it with supply-side equations. We use a panel dataset consisting of apps’ sales, prices, and characteristics from Apple App Store and Google Play for 4 months in the South Korean market. Our results show demand increases with the file size, app age, description length, and number of screenshots. In the supply-side file size and app age are major cost component in app development and there exist significant returns to scale in app development. Counterfactual experiments show the effects of price discounts increase non-linearly and strong substitution effects between game apps and other apps such as utility and education apps. We find the apps in both app stores enhanced consumer surplus by approximately $158 million.

Share

COinS
 
Dec 14th, 12:00 AM

Estimating Demand for Applications in the New Mobile Economy

A fundamental change brought forth by the advent of the mobile internet has been the widespread adoption of mobile applications. We build a builds a structural model of user demand for mobile apps and jointly estimate it with supply-side equations. We use a panel dataset consisting of apps’ sales, prices, and characteristics from Apple App Store and Google Play for 4 months in the South Korean market. Our results show demand increases with the file size, app age, description length, and number of screenshots. In the supply-side file size and app age are major cost component in app development and there exist significant returns to scale in app development. Counterfactual experiments show the effects of price discounts increase non-linearly and strong substitution effects between game apps and other apps such as utility and education apps. We find the apps in both app stores enhanced consumer surplus by approximately $158 million.