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Migration between platforms

Biglaiser, Gary, Crémer, Jacques and Veiga, André (2019) Migration between platforms. TSE Working Paper, n. 19-1038, Toulouse

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We study incumbency advantage in platform industries, where the utility of participating in a platform is increasing in the mass of users participating in that platform. Individuals receive stochastic opportunities to migrate from an incumbent to a new (entrant) platform, which they can accept or wait until the next opportunity arises. Individuals have an incentive to delay migration until enough other users have migrated, which provides a micro-foundation for incumbency advantage.
When users obtain more frequent migration opportunities, the cost of delaying migration is reduced, so incumbency advantage increases. Migration technologies that allow for large groups of individuals to migrate in a short period of time (i.e., coordination) are also associated with higher incumbency advantage. There always exists some capacity constraint by the entrant which increases the cost of delaying migration and thereby reduces incumbency advantage. Multi-homing reduces incumbency advantage but does not eliminate it. When individuals have heterogeneous preferences for the two platforms, there can be welfare losses due to excessive segregation of individuals across the platforms.

Item Type: Monograph (Working Paper)
Language: English
Date: September 2019
Place of Publication: Toulouse
Divisions: TSE-R (Toulouse)
Institution: Université Toulouse 1 Capitole
Site: UT1
Date Deposited: 19 Sep 2019 08:01
Last Modified: 14 Apr 2020 11:46
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