Self-Preferencing, Quality Provision, and Welfare in Mobile Application Markets

Arbeitspapier

Platforms may give preferential treatment to their own products in search results. Whether and how to regulate this self-preferencing behavior is an intensely debated antitrust issue. This paper identifies self-preferencing and quantifies its equilibrium welfare effects in Apple App Store. I start by examining the effect of a change in the platform's search algorithm that dropped several Apple's apps from top positions. I find that the search algorithm change leads to significantly higher installations and update frequencies of independent apps that compete with Apple's apps in the same categories. Then I develop an empirical model of consumer search and update competition allowing for potential self-preferencing. The model is estimated with aggregate data on consumer search and purchase, search ranking, and app characteristics. Estimation results point to self-preferencing: Apple's apps are more likely to be ranked higher than independent apps conditional on app quality, price, ratings, and title match with search terms. Based on counterfactual simulations, I find that eliminating the identified self-preferencing modestly increases the quality of independent apps on average. Furthermore, the elimination improves consumer surplus by $2.2 million and profits of independent developers by $1.6 million per month.

Angaben zum Objekt

• Sprache: Englisch

Verweise und Beziehungen

• Erschienen in: Series: CESifo Working Paper ; No. 10042

Klassifikation und Themen

• Klassifikation: Wirtschaft ; Consumer Economics: Empirical Analysis ; Market Structure, Pricing, and Design: Oligopoly and Other Forms of Market Imperfection ; Search; Learning; Information and Knowledge; Communication; Belief; Unawareness ; Oligopoly and Other Imperfect Markets ; Monopolization; Horizontal Anticompetitive Practices ; Information and Internet Services; Computer Software
• Thema: search algorithm ; consumer search ; endogenous product characteristics ; mobile application

Beteiligte, Orts- und Zeitangaben

• Ereignis: Geistige Schöpfung
• (wer): Teng, Xuan
• Ereignis: Veröffentlichung
• (wer): Center for Economic Studies and ifo Institute (CESifo)
• (wo): Munich
• (wann): 2022

Weitere Informationen

• Handle: http://hdl.handle.net/10419/267275
• Letzte Aktualisierung: 10.03.2025, 11:45 MEZ