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First mover advantages in mobile telecommunications: Evidence from OECD countries

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  • Muck, Johannes
  • Heimeshoff, Ulrich

Abstract

We explore the existence of first mover advantages in mobile telecommunications markets. Building on a data set comprising monthly penetration rates, market concentration, number of active operators, and market shares of 90 followers from 33 OECD countries, we estimate a dynamic growth model. Our analysis delivers five key results. Regarding a follower's longrun market share, we observe that (1) the penetration rate at the time of market entry exerts an inverted u-shaped effect, suggesting the existence of an optimal time for issuing additional licenses for mobile network operation; (2) the concentration rate at market entry exerts a positive effect, implying that it is easier for followers to enter a more concentrated market; (3) both the number of active operators at market entry and the number of currently active operators have a negative impact. Furthermore, we find that a follower's rate of convergence to the long-run market share is (4) negatively influenced by the current market concentration and number of active operators; (5) negatively affected by changes in the penetration rate since market entry, which strongly indicates the presence of substantial first mover advantages for pioneering network operators.

Suggested Citation

  • Muck, Johannes & Heimeshoff, Ulrich, 2012. "First mover advantages in mobile telecommunications: Evidence from OECD countries," DICE Discussion Papers 71, University of Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).
  • Handle: RePEc:zbw:dicedp:71
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    References listed on IDEAS

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    Cited by:

    1. JP Eggers & Michal Grajek & Tobias Kretschmer, 2011. "Performance implications of core and complementary pre-entry experience: The role of consumer heterogeneity in mobile telephony," ESMT Research Working Papers ESMT-11-03 (R2), ESMT European School of Management and Technology, revised 29 May 2012.

    More about this item

    Keywords

    First mover advantages; Asymmetric regulation; Market share convergence; Mobile telecommunications;

    JEL classification:

    • L96 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Telecommunications
    • K23 - Law and Economics - - Regulation and Business Law - - - Regulated Industries and Administrative Law
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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