One query I’ve wished to contemplate formally for a while is whether or not a decrease fee charge within the App Retailer would lead builders to scale back the costs they cost for digital items in free-to-play video games. The newest growth within the Epic Video games v. Apple trial gave me the impetus to take action, and I’m publishing a short commentary on the subject.

The commentary begins with a formalization of free-to-play pricing logic, modeling builders as monopolistic actors that worth digital items to maximise income. It then surveys the empirical literature on VAT pass-through, arguing that, like VAT cuts, reductions in App Retailer charges are unlikely to be totally handed on to customers.

This evaluation asserts that whereas fee reductions might end in non-pricing advantages being realized by customers, they’re unlikely to end in decrease baseline costs for digital items.