First Mover Advantage and the Speed of Competitive Entry, 1887-1986

21 Pages Posted: 10 Nov 1999  

Rajshree Agarwal

University of Maryland - Robert H. Smith School of Business

Michael Gort

SUNY at Buffalo, College of Arts & Sciences, Department of Economics; National Bureau of Economic Research (NBER)

Date Written: September 1999

Abstract

The paper examines historical changes in the duration of the interval between the commercial introduction of a new product and the time when entry by later competitors begins.

The paper begins by examining a priori reasons why the duration of this interval in the U.S. economy may either expand or contract. This is done in the context of the literature on barriers to entry, and trends of the underlying barriers over the last century.

Data for 46 major product innovations show a systematic tendency for the interval identified above to contract over the last century. The average time-span was almost 33 years at the turn of the century, and has declined to 3.4 years for innovations in 1967-86. The declining trend in the monopoly interval is consistent across products that differ greatly in a variety of attributes.

Empirical evidence suggests this change resulted largely from a lowering of absolute cost advantages of first movers through easier transfer of knowledge and skills across firms and was facilitated also by the growth of markets.

JEL Classification: O30, L20

Suggested Citation

Agarwal, Rajshree and Gort, Michael, First Mover Advantage and the Speed of Competitive Entry, 1887-1986 (September 1999). Available at SSRN: https://ssrn.com/abstract=167330 or http://dx.doi.org/10.2139/ssrn.167330

Rajshree Agarwal (Contact Author)

University of Maryland - Robert H. Smith School of Business ( email )

College Park, MD 20742-1815
United States

Michael Gort

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

SUNY at Buffalo, College of Arts & Sciences, Department of Economics ( email )

Buffalo, NY 14260
United States
716-645-2121 x 42 (Phone)
716-645-2127 (Fax)

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