Early mover advantages: An empirical analysis of European mobile phone markets

Authors:
Govert E. Bijwaard;Maarten C. W. Janssen;Emiel Maasland
Affiliations:
Erasmus University Rotterdam, P.O. Box 1738, 3000 DR Rotterdam, Netherlands;Erasmus University Rotterdam, P.O. Box 1738, 3000 DR Rotterdam, Netherlands and Tinbergen Institute Rotterdam, Burg. Oudlaan 50, 3062 PA Rotterdam, Netherlands;Erasmus University Rotterdam, P.O. Box 1738, 3000 DR Rotterdam, Netherlands
Venue:
Telecommunications Policy
Year:
2008

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Abstract

This paper analyzes 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 a dynamic model of market share development and a series of static models are considered. There is clear evidence of 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.