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20 Competition & Reg. Network Indus. 3 (2019)

handle is hein.journals/netwin20 and id is 1 raw text is: Article CRNI Combating incumbency advantage of network effects: The role of entrant's decisions and consumer preferences Competition and Regulation in Network Industries 2019, Vol. 20(l) 3-32 @ The Author(s) 2019 Article reuse guidelines: sagepub.com/journals-permissions DOI: 10.1 177/1783591718823922 journals.sagepub.com/home/crn OSAGE Agam Gupta Indian Institute of Management Rohtak, India Arqum Mateen Indian Institute of Management Kozhikode, India Divya Sharma Indian Institute of Management Rohtak, India Uttam K. Sarkar Indian Institute of Management Calcutta, India Vinu Cheruvil Thomas Indian Institute of Management Tiruchirappalli, India Abstract This article studies the competitive dynamics between an incumbent and a late entrant in a market governed by network effects. Classifying markets based on decision criterion used by majority of consumers in a market, an analytical model for the likelihood of incumbent displacement in these markets is developed and corroborated using simulations. Using product quality offered and product price charged by the entrant as managerial levers, the impact of managerial decision-making on the expected market share of the entrant is dis- cussed. Efficacy of seeding and delayed entry by the entrant in an attempt to perfect its product is also examined. Keywords Network effects, product quality, product price, consumer heterogeneity, late entry Corresponding author: Agam Gupta, Management Information Systems Area, Indian Institute of Management Rohtak, Rohtak 124010, Haryana, India. E-mail: agamgupta6 II @gmail.com