Interdependencies in the Discovery and Adoption of Facebook Applications

Facebook Platform is a prominent example of an internet-based service for which third-party developers can offer small add-on programs, which are often referred to as applications. The distribution of success of applications is highly skewed. This market structure with few blockbuster applications and a long-tail of unpopular ones is common in the media, entertainment and software industries. Philip Mayrhofer compiled individual-level survey data as well as an original panel data set of Facebook applications in order to examine the market for Facebook applications in detail. Specifically he identifies interdependencies such as bandwagon effects between users and spillovers between applications and analyzes whether they contribute to the concentrated market structure.