Friday, December 28, 2012
Posted by D. Daniel Sokol
Michael Sinkinson (The Wharton School, University of Pennsylvania) analyzes The Determinants of Supply and Demand for Mobile Applications.
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.