Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/216581 
Year of Publication: 
2020
Series/Report no.: 
CESifo Working Paper No. 8185
Publisher: 
Center for Economic Studies and ifo Institute (CESifo), Munich
Abstract: 
We study incumbency advantage in markets with positive consumption externalities. Users of an incumbent platform receive stochastic opportunities to migrate to an entrant. They can accept a migration opportunity or wait for a future opportunity. In some circumstances, users have incentives to delay migration until others have migrated. If they all do so, no migration takes place, even when migration would have been Pareto-superior. This provides an endogenous micro-foundation for incumbency advantage. We use our framework to identify environments where incumbency advantage is larger.
Subjects: 
platform migration
standardization and compatibility
industry dynamics
JEL: 
D85
L14
R23
L15
L16
Document Type: 
Working Paper
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