Should I stay or should I go? Migrating away from an incumbent platform
47 Pages Posted: 14 Apr 2020 Last revised: 28 Jan 2021
Date Written: January 28, 2020
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. We use our framework to identify environments where incumbency advantage is larger. A key result is that having more migration opportunities actually increases incumbency advantage.
Keywords: Platform, Migration, Standardization and Compatibility, Industry Dynamics
JEL Classification: D85, L14, R23, L15, L16
Suggested Citation: Suggested Citation