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

Gary Biglaiser, Jacques Crémer and André Veiga

RAND Journal of Economics, 2022, vol. 53, issue 3, 453-483

Abstract: We study incumbency advantage in markets with positive consumption externalities. Users of an incumbent platform receive stochastic 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.

Date: 2022
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https://doi.org/10.1111/1756-2171.12418

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