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First-Mover Advantage and the Speed of Competitive Entry, 1887-1986

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  • Agarwal, Rajshree
  • Gort, Michael

Abstract

This paper examines historical changes in the duration of the interval between the commercial introduction of a new product and the time when entry by later competitors begins. A priori reasons are examined why the duration of this interval in the U.S. economy may either expand or contract. Data for 46 major product innovations, however, show a systematic tendency for the interval identified above to contract over the last century. The average time span was almost 33 years at the turn of the century and has declined to 3.4 years for innovations in 1967-86. Empirical evidence suggests this change resulted largely from a lowering of absolute cost advantages of first movers through easier transfer of knowledge and skills across firms and was also facilitated by the growth of markets. Copyright 2001 by the University of Chicago.

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  • Agarwal, Rajshree & Gort, Michael, 2001. "First-Mover Advantage and the Speed of Competitive Entry, 1887-1986," Journal of Law and Economics, University of Chicago Press, vol. 44(1), pages 161-177, April.
    • Handle: RePEc:ucp:jlawec:v:44:y:2001:i:1:p:161-77
    DOI: 10.1086/320279
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