Many thanks to Stan Liebowitz, Ivan Png, Paul Seabright, Matthijs Wildenbeest, Alejandro Zentner, and participants at the 2011 IDEI Economics of the Internet Conference for insights that helped to refine the focus of this article. I thank in particular Martin K. Perry for his detailed and insightful comments on a previous version of this article. Two referees and the editor, Hanming Fang, have provided very thoughtful and constructive comments and suggestions for which I am grateful. The opinions expressed in this article are those of the author and do not necessarily represent the views of the Federal Communications Commission or the United States Government. Please address correspondence to: Octavian Carare, Federal Communications Commission, Washington, DC 20024, U.S.A. Phone: 202-418-7530. E-mail: firstname.lastname@example.org.
THE IMPACT OF BESTSELLER RANK ON DEMAND: EVIDENCE FROM THE APP MARKET*
Article first published online: 25 JUL 2012
© (2012) by the Economics Department of the University of Pennsylvania and the Osaka University Institute of Social and Economic Research Association
International Economic Review
Volume 53, Issue 3, pages 717–742, August 2012
How to Cite
Carare, O. (2012), THE IMPACT OF BESTSELLER RANK ON DEMAND: EVIDENCE FROM THE APP MARKET. International Economic Review, 53: 717–742. doi: 10.1111/j.1468-2354.2012.00698.x
Manuscript received July 2010; revised December 2010.
- Issue published online: 25 JUL 2012
- Article first published online: 25 JUL 2012
This article uses daily data on the ranking by sales of the top 100 apps sold through Apple’s App Store to provide evidence of the causal impact of today’s bestseller rank information on tomorrow’s demand. The estimates indicate that the willingness to pay of consumers is about $4.50 greater for a top ranked app than for the same unranked app. The results also indicate that the effects of bestseller status on willingness to pay decline steeply with rank at the top ranks, but remain economically significant for the apps in the first half of the top 100 list.