The Impact of Visibility on Demand in the Market for Mobile Apps

21 Pages Posted: 24 Jun 2014

See all articles by Bar Ifrach

Bar Ifrach

Uber Technologies Inc. - Uber Freight

Ramesh Johari

Stanford University

Date Written: February 11, 2014

Abstract

The growth of mobile applications on smartphones and tablets ("apps") ranks as one of the most astonishing technological developments of the recent past. The marketplaces for these mobile apps (i.e., the Apple iOS App Store and Google Play) are a significant disruptive change in the way content is created and consumed. In this paper, taking a data-driven approach, we study the impact visibility in these marketplaces has on demand that apps obtain. The market platforms feature "top-ranked" charts that list apps by number of downloads. A shift to a high position in these charts is typically followed by a remarkable boost in demand. We call the effect of top-rank position on future sales an *indirect effect.* Our main contribution is to estimate the magnitude of this indirect effect. We develop a novel econometric methodology that allows us to deal with the significant endogeneity in the problem: ranks are determined by downloads, but also affect downloads. Our results show that the indirect effect is statistically significant and substantial; for example, we find that moving from position 20 to position 1 can nearly double the demand for an app.

Keywords: Mobile apps, market design, search ranking

JEL Classification: D04

Suggested Citation

Ifrach, Bar and Johari, Ramesh, The Impact of Visibility on Demand in the Market for Mobile Apps (February 11, 2014). Available at SSRN: https://ssrn.com/abstract=2444542 or http://dx.doi.org/10.2139/ssrn.2444542

Bar Ifrach

Uber Technologies Inc. - Uber Freight ( email )

685 Market Street
San Francisco, CA 94105
United States

Ramesh Johari (Contact Author)

Stanford University ( email )

473 Via Ortega
Stanford, CA 94305-9025
United States

Register to save articles to
your library

Register

Paper statistics

Downloads
408
Abstract Views
1,601
rank
71,713
PlumX Metrics