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Second Mover Advantage and Entry Timing

Authors


  • The authors would like to thank Dale Stahl, Tom Wiseman and Max Stinchcombe for helpful comments. We thank Parviz Gheblalivand and Matthew Sibley for able research assistance. Comments by the Editor and three referees were also most helpful.

Abstract

We describe a model of entry timing assuming that a second mover can benefit from observing the experience of a first mover. We focus on how market attractiveness characteristics such as size and cost affect the time until first entry. The effects depend on whether the number of participants is exogenous or endogenous. In the former case, a more attractive market leads to earlier entry. In the latter case, it leads to later entry. Treating the number of firms as an integer, free entry leads to non-monotone, but testable, effects of market attractiveness on entry timing.

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