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In my dissertation, I will analyze how the product market position of amobile app affects its pricing strategies, which in turn impacts an app'smonetization process. Using natural language processing and k-mean clusteringon apps' text descriptions, I created a new variable that measures thedistinctiveness of an app as compared to its peers. I created four pricingvariables, price, cumulative installs, and indicators of whether an appcontains in-app ads and purchases. I found that the effect differs forsuccessful apps and less successful apps. I measure the success here usingcumulative installs and the firms that developed the apps. Based on third-partyrankings and the shape of the distribution of installs, I set two thresholdsand divided apps into market-leading and market-follower apps. Themarket-leading sub-sample consists of apps with high cumulative installs ordeveloped by prestigious firms, and the market-follower sub-sample consists ofthe rest of the apps. I found that the impact of being niche is smaller in themarket-leading apps because of their relatively higher heterogeneity. Inaddition, being niche also impact utility apps differently from hedonic apps orapps with two-sided market characteristics. For the special gaming category,being niche has some effect but is smaller than in the market followersub-sample. My research provides novel empirical evidence of digital productsto various strands of theoretical research, including the optimaldistinctiveness theory, product differentiation, price discrimination in two ormulti-sided markets, and consumer psychology.

Dissertation on Applied Microeconomics of Freemium Pricing Strategies in Mobile App Market