Saturday, October 27, 2012

Second Mover Advantage and Entry Timing

Posted by D. Daniel Sokol

Vinh Du Tran, TNK, David S. Sibley, University of Texas at Austin - Department of Economics, and Simon Wilkie, University of Southern California describe Second Mover Advantage and Entry Timing.

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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