Entry Patterns Over the Product Life Cycle*

Abstract

We study an oligopoly model of entry over the product life cycle based on empirical evidence of demand for a new product growing over time and eventually falling. Yet, we assume that firms do not know ex ante when this can occur, which creates incentives to update information by delaying irreversible entry. Our model distinguishes and explains different patterns of entry characterized by firms entering simultaneously and/or in a sequential fashion, with entry rates accelerating or decelerating under certain conditions related to the rate at which individual profit decreases as more firms enter the industry.