Incumbency Advantage and its Value

8 Pages Posted: 24 Jan 2019

See all articles by Gary Biglaiser

Gary Biglaiser

University of North Carolina

Emilio Calvano

University of Bologna - Department of Economics; University of Toulouse 1 - Department of Economics; CSEF - Center for Studies in Economics and Finance

Jacques Cremer

Toulouse School of Economics

Date Written: Spring 2019

Abstract

Markets with network effects are typically concentrated. The aim of this paper is to discuss some recent work on “incumbency advantage.” That is, the fact that firms already installed generate higher profits than entrants even if the latter offer identical or even better terms (in terms of price and quality) to consumers. In particular, we review recently known sources of the advantage and potential mitigating factors and point to a number of open issues.

Keywords: data barrier, incumbency advantage, platform competition

Suggested Citation

Biglaiser, Gary and Calvano, Emilio and Cremer, Jacques, Incumbency Advantage and its Value (Spring 2019). Journal of Economics & Management Strategy, Vol. 28, Issue 1, pp. 41-48, 2019, Available at SSRN: https://ssrn.com/abstract=3320048 or http://dx.doi.org/10.1111/jems.12307

Gary Biglaiser (Contact Author)

University of North Carolina ( email )

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

Emilio Calvano

University of Bologna - Department of Economics ( email )

Bologna
Italy

University of Toulouse 1 - Department of Economics ( email )

Place Anatole-France
Toulouse Cedex, F-31042
France

CSEF - Center for Studies in Economics and Finance ( email )

Via Cintia
Complesso Monte S. Angelo
Naples, Naples 80126
Italy

Jacques Cremer

Toulouse School of Economics ( email )

1 Esplanade de l'Université
Toulouse Cedex 06, 31080
France

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