Should I stay or should I go? Migrating away from an incumbent platform

Résumé

We study incumbency advantage in markets with positive consumption externalities. Users of an incumbent platform receive sto- chastic opportunities to migrate to an entrant and can either accept them 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.

Mots-clés

Platform; Migration; Standardization and Compatibility; Industry Dynamics;

Codes JEL

D85: Network Formation and Analysis: Theory
L14: Transactional Relationships • Contracts and Reputation • Networks
R23: Regional Migration • Regional Labor Markets • Population • Neighborhood Characteristics
L15: Information and Product Quality • Standardization and Compatibility
L16: Industrial Organization and Macroeconomics: Industrial Structure and Structural Change • Industrial Price Indices