Platform design and innovation incentives: Evidence from the product rating system on Apple's App Store

Benjamin Leyden

International Journal of Industrial Organization, 2025, vol. 99, issue C

Abstract: I study how the aggregation of product ratings on digital platforms affects the strategic behavior of third-party firms. Leveraging an unexpected and exogenous change in the rating system on Apple's App Store marketplace, I find that for nearly a decade, the manner in which the App Store aggregated customer ratings discouraged product updating by developers. Additionally, developers who were more reliant on the rating system were more responsive to the incentives created by this policy. Last, I provide suggestive evidence that the policy led to a decrease in developer effort on the platform.

Keywords: Reputation systems; Online platforms; Product innovation (search for similar items in EconPapers)
JEL-codes: L15 L86 O30 (search for similar items in EconPapers)
Date: 2025
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Working Paper: Platform Design and Innovation Incentives: Evidence from the Product Rating System on Apple's App Store (2021)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:indorg:v:99:y:2025:i:c:s0167718724000882

DOI: 10.1016/j.ijindorg.2024.103133

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