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

Andreea Enache, Richard Friberg and Magnus Wiklander

International Journal of Industrial Organization, 2023, vol. 88, issue C

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.

Keywords: Freemium; Demand estimation; Mobile app markets; Platforms (search for similar items in EconPapers)
JEL-codes: D43 L13 L82 (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:eee:indorg:v:88:y:2023:i:c:s0167718723000279

DOI: 10.1016/j.ijindorg.2023.102945

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