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Incentives for quality over time - the case of Facebook applications

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  • Claussen, Jörg
  • Kretschmer, Tobias
  • Mayrhofer, Philip

Abstract

We study the market for applications on Facebook, the dominant platform for social networking and make use of a rule change by Facebook by which high-quality applications were rewarded with further opportunities to engage users. We find that the change led to quality being a more important driver of usage while sheer network size became less important. Further, we find that update frequency helps applications maintain higher usage, while generally usage of Facebook applications declines less rapidly with age.

Suggested Citation

  • Claussen, Jörg & Kretschmer, Tobias & Mayrhofer, Philip, 2012. "Incentives for quality over time - the case of Facebook applications," LSE Research Online Documents on Economics 121769, London School of Economics and Political Science, LSE Library.
    • Handle: RePEc:ehl:lserod:121769
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    Cited by:

    1. Hanna Hałaburda & Yaron Yehezkel, 2016. "The Role of Coordination Bias in Platform Competition," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 25(2), pages 274-312, April.

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    More about this item

    Keywords

    usage intensity; social media; platform management; two-sided markets;
    All these keywords.

    JEL classification:

    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
    • L50 - Industrial Organization - - Regulation and Industrial Policy - - - General
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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