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Migration between Platforms

23 Pages Posted: 7 Oct 2013  

Gary Biglaiser

University of North Carolina

Jacques Cremer

Toulouse School of Economics (IDEI & GREMAQ)

Andre Veiga

University of Oxford - Nuffield College

Date Written: October 1, 2013

Abstract

We develop a model of dynamic platform formation under positive platform externalities. Users can switch between an incumbent and entrant platforms, switching opportunities arise stochastically and users can choose whether to accept or reject an opportunity to switch. For homogeneous users, we characterize the incumbency advantage implied by a given equilibrium realization of the switching process. For linear utility, incumbency advantage increases in the mean and dispersion of the incumbent’s share during the switching process, which captures the momentum and coordination of the process. Heterogeneity in preferences may lead some users to delay their switching or never switch at all. Assuming that switching opportunities arrive according to a Poisson process, users switch to the entrant platform.

Keywords: Platform Formation, Migration, Standardization and Compatibility, Industry

JEL Classification: D85, L14, R23, L15, L16

Suggested Citation

Biglaiser, Gary and Cremer, Jacques and Veiga, Andre, Migration between Platforms (October 1, 2013). NET Institute Working Paper No. 13-18. Available at SSRN: https://ssrn.com/abstract=2336410 or http://dx.doi.org/10.2139/ssrn.2336410

Gary Biglaiser

University of North Carolina ( email )

Chapel Hill, NC 27599
United States
919-966-4884 (Phone)
919-966-4986 (Fax)

Jacques Cremer

Toulouse School of Economics (IDEI & GREMAQ) ( email )

Toulouse School of Economics
21 Allee de Brienne
Toulouse Cedex 6, F-31015
France
+33 620116695 (Phone)
+33 5 6112 8637 (Fax)

Andre Veiga (Contact Author)

University of Oxford - Nuffield College ( email )

New Road
Oxford, OX1 1NF
United Kingdom

HOME PAGE: http://www.andreveiga.com

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