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Incumbency advantage and its value

Author

Listed:
  • Gary Biglaiser

    (UNC-Chapel Hill - Université de Caroline du Nord à Chapel Hill = University of North Carolina [Chapel Hill] - UNC - University of North Carolina System)

  • Emilio Calvano

    (UNIBO - Alma Mater Studiorum Università di Bologna = University of Bologna)

  • Jacques Crémer

    (TSE-R - Toulouse School of Economics - UT Capitole - Université Toulouse Capitole - Comue de Toulouse - Communauté d'universités et établissements de Toulouse - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement)

Abstract

Markets with network effects are typically concentrated. The aim of this paper is to discuss some recent work on "incumbency advantage." That is, the fact that firms already installed generate higher profits than entrants even if the latter offer identical or even better terms (in terms of price and quality) to consumers. In particular, we review recently known sources of the advantage and potential mitigating factors and point to a number of open issues.

Suggested Citation

  • Gary Biglaiser & Emilio Calvano & Jacques Crémer, 2019. "Incumbency advantage and its value," Post-Print hal-02945972, HAL.
    • Handle: RePEc:hal:journl:hal-02945972
    DOI: 10.1111/jems.12307
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    Cited by:

    1. Katz, Michael L., 2021. "Big Tech mergers: Innovation, competition for the market, and the acquisition of emerging competitors," Information Economics and Policy, Elsevier, vol. 54(C).
    2. Yassine Lefouili & Leonardo Madio, 2022. "The economics of platform liability," European Journal of Law and Economics, Springer, vol. 53(3), pages 319-351, June.
    3. Argentesi, Elena & Buccirossi, Paolo & Calvano, Emilio & Duso, Tomaso & Marrazzo, Alessia & Nava, Salvatore, 2021. "Merger Policy in Digital Markets: An Ex Post Assessment," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 17(1), pages 95-140.
    4. Martin Peitz, 2024. "Digital Attention Intermediaries," CRC TR 224 Discussion Paper Series crctr224_2024_520, University of Bonn and University of Mannheim, Germany.
    5. Jullien, Bruno & Sand-Zantman, Wilfried, 2021. "The Economics of Platforms: A Theory Guide for Competition Policy," Information Economics and Policy, Elsevier, vol. 54(C).
    6. Graef, Inge & Prüfer, Jens, 2021. "Governance of data sharing: A law & economics proposal," Research Policy, Elsevier, vol. 50(9).
    7. Paolo Siciliani & Emanuele Giovannetti, 2019. "Platform competition and incumbency advantage under heterogeneous switching cost — exploring the impact of data portability," Bank of England working papers 839, Bank of England.
    8. Carroni, Elias & Paolini, Dimitri, 2020. "Business models for streaming platforms: Content acquisition, advertising and users," Information Economics and Policy, Elsevier, vol. 52(C).
    9. Sarit Markovich & Yaron Yehezkel, 2019. "Group Hug: Platform Competition with User-groups," Working Papers 19-04, NET Institute.
    10. Jin, Ginger Zhe & Wagman, Liad, 2021. "Big data at the crossroads of antitrust and consumer protection," Information Economics and Policy, Elsevier, vol. 54(C).
    11. Peneder, Michael & Bilek-Steindl, Sandra & Bärenthaler-Sieber, Susanne & Bock-Schappelwein, Julia & Charos, Alexandros, 2025. "Business use of online platforms: Competition, satisfaction and willingness to pay," Technology in Society, Elsevier, vol. 82(C).
    12. Johannes Loh & Tobias Kretschmer, 2023. "Online communities on competing platforms: Evidence from game wikis," Strategic Management Journal, Wiley Blackwell, vol. 44(2), pages 441-476, February.
    13. Andrei Hagiu & Julian Wright, 2023. "Data‐enabled learning, network effects, and competitive advantage," RAND Journal of Economics, RAND Corporation, vol. 54(4), pages 638-667, December.
    14. Calvano, Emilio & Polo, Michele, 2021. "Market power, competition and innovation in digital markets: A survey," Information Economics and Policy, Elsevier, vol. 54(C).
    15. Peitz, Martin, 2020. "Economic policy for digital attention intermediaries," ZEW Discussion Papers 20-035, ZEW - Leibniz Centre for European Economic Research.
    16. Lester T. Chan, 2021. "Divide and conquer in two‐sided markets: A potential‐game approach," RAND Journal of Economics, RAND Corporation, vol. 52(4), pages 839-858, December.
    17. Jiatao Li & Liang Chen & Jingtao Yi & Jiye Mao & Jianwen Liao, 2019. "Ecosystem-specific advantages in international digital commerce," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 50(9), pages 1448-1463, December.
    18. Yiquan Gu & Leonardo Madio & Carlo Reggiani, 2019. "Exclusive Data, Price Manipulation and Market Leadership," CESifo Working Paper Series 7853, CESifo.
    19. Afilipoaie, Adelaida & Donders, Karen & Ballon, Pieter, 2022. "The European Commission's approach to mergers involving software-based platforms: Towards a better understanding of platform power," Telecommunications Policy, Elsevier, vol. 46(5).
    20. Shekhar, Shiva, 2020. "Zero Pricing Platform Competition," MPRA Paper 99364, University Library of Munich, Germany.
    21. Michael Peneder & Sandra Bilek-Steindl & Susanne Bärenthaler-Sieber & Julia Bock-Schappelwein & Alexandros Charos, 2025. "Business Use of Online Platforms: Competition, Satisfaction and Willingness to Pay," WIFO Working Papers 701, WIFO.
    22. Giovannetti, Emanuele & Siciliani, Paolo, 2023. "Platform Competition and Incumbency Advantage under Heterogeneous Lock-in effects," Information Economics and Policy, Elsevier, vol. 63(C).

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