Early Mover Advantages

Tinbergen Institute Discussion Paper No. TI 05-007/1

28 Pages Posted: 26 Jan 2005

See all articles by Govert E. Bijwaard

Govert E. Bijwaard

Netherlands Interdisciplinary Demographic Institute (NIDI); Erasmus University Rotterdam (EUR) - Erasmus School of Economics (ESE); IZA Institute of Labor Economics

Maarten Janssen

University of Vienna - Faculty of Business, Economics, and Statistics

Emiel Maasland

Erasmus University Rotterdam (EUR) - Erasmus School of Economics (ESE)

Date Written: December 22, 2004

Abstract

In this paper we analyze empirically whether and if so to what extent later entrants in the European mobile telephony industry have a disadvantage vis-a-vis incumbents and early mover entrants. To analyze this question we consider a series of static models and a dynamic model of market share development. We find a clear early mover advantage, mainly caused by the influence of the penetration rate: It pays to enter when still few people have acquired a mobile telephone. Another important determining factor is the Herfindahl-Hirschman Index at the moment of entry: It is significantly easier to enter a highly concentrated industry. Finally, there are important differences between countries possibly indicating the relative strength of the national regulators. For example, it turns out that it is relatively difficult to enter the mobile telephony sector and gain market share in the Scandinavian countries.

Keywords: Telecommunications, Entry, First-mover Advantage

JEL Classification: L51, L96

Suggested Citation

Bijwaard, Govert and Janssen, Maarten C. W. and Maasland, Emiel, Early Mover Advantages (December 22, 2004). Tinbergen Institute Discussion Paper No. TI 05-007/1, Available at SSRN: https://ssrn.com/abstract=654382 or http://dx.doi.org/10.2139/ssrn.654382

Govert Bijwaard

Netherlands Interdisciplinary Demographic Institute (NIDI) ( email )

P.O. Box 11650
NL-2502 AR The Hague
Netherlands
+31 70 3565224 (Phone)

Erasmus University Rotterdam (EUR) - Erasmus School of Economics (ESE) ( email )

P.O. Box 1738
3000 DR Rotterdam, NL 3062 PA
Netherlands

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Maarten C. W. Janssen (Contact Author)

University of Vienna - Faculty of Business, Economics, and Statistics ( email )

Vienna, A-1210
Austria

Emiel Maasland

Erasmus University Rotterdam (EUR) - Erasmus School of Economics (ESE) ( email )

P.O. Box 1738
3000 DR Rotterdam, NL 3062 PA
Netherlands
+31 10 408 1513 (Phone)

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