Network Effects in the PC Gaming Industry

Abstract: Various empirical papers have proved the existence of network effects in many different industries and developed methods to quantify the network effect. The thesis establishes a structural model for the demand system of the PC gaming industry and estimates the reduced-form equations using instrumental variable estimators. The thesis proposes two valid instrumental variables from the labor supply side and the Covid Pandemic. The thesis identifies the existence of indirect network effects in both the platform adoption side and software provision side using the data from the game distributing platform, Steam.