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Preemptive Entry and Technology Diffusion: The Market for Drive‐In Theaters

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  • Ricard Gil
  • Jean‐François Houde
  • Shilong Sun
  • Yuya Takahashi

Abstract

This article studies entry preemption in new industries. We first test a key prediction of dynamic entry games: Entry preemption is most relevant in intermediate‐sized markets, where firms face highest uncertainty about future entry. Using US drive‐in theater market (1945–1957) data, we find robust evidence for this non‐monotonic relationship between market size and early entry probability. We then estimate a dynamic entry game, and quantify preemption effects through counterfactual analysis. Preemptive motives increase early entry by up to 40% in mid‐size markets, raising entry costs by 5% and reducing firms' expected value by 1%.

Suggested Citation

  • Ricard Gil & Jean‐François Houde & Shilong Sun & Yuya Takahashi, 2026. "Preemptive Entry and Technology Diffusion: The Market for Drive‐In Theaters," RAND Journal of Economics, RAND Corporation, vol. 57(3), pages 471-494, September.
    • Handle: RePEc:bla:randje:v:57:y:2026:i:3:p:471-494
    DOI: 10.1111/1756-2171.70056
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