Pioneer, early follower or late entrant: Entry dynamics with learning and market competition

Chen, Chia Hui; Mukherjee, Arijit; Ishida, Junichiro

Abstract

Timing of market entry is one of the most important strategic decisions a firm must make, but its decision process becomes convoluted with information and payoff externalities. The threat of competition pushes firms to enter earlier to preempt their rivals while the possibility of learning makes them cautiously wait for others to take action. This combination amounts to a new class of timing games where a first-mover advantage first emerges as in preemption games but a second-mover advantage later prevails as in wars of attrition. Our model identifies under what conditions a firm becomes a pioneer, early follower or late entrant and provides efficiency implications by highlighting an elusive link between static market competition and dynamic entry competition.

Citation

Chen, C. H., Mukherjee, A., & Ishida, J. (2023). Pioneer, early follower or late entrant: Entry dynamics with learning and market competition. European Economic Review, 152, Article 104360. https://doi.org/10.1016/j.euroecorev.2022.104360

• Journal Article Type: Article
• Acceptance Date: Dec 16, 2022
• Online Publication Date: Jan 5, 2023
• Publication Date: Jan 5, 2023
• Deposit Date: Dec 19, 2022
• Publicly Available Date: Jan 6, 2025
• Journal: European Economic Review
• Print ISSN: 0014-2921
• Electronic ISSN: 1873-572X
• Publisher: Elsevier BV
• Peer Reviewed: Peer Reviewed
• Volume: 152
• Article Number: 104360
• DOI: https://doi.org/10.1016/j.euroecorev.2022.104360
• Keywords: market entry; market competition; private learning; signaling; preemption; consumer
• Public URL: https://nottingham-repository.worktribe.com/output/15159879
• Publisher URL: https://www.sciencedirect.com/science/article/pii/S0014292122002409?via%3Dihub
• Additional Information: This article is maintained by: Elsevier; Article Title: Pioneer, early follower or late entrant: Entry dynamics with learning and market competition; Journal Title: European Economic Review; CrossRef DOI link to publisher maintained version: https://doi.org/10.1016/j.euroecorev.2022.104360