Each of the following parts describes a firm that was an early mover in its market. In light of the information provided, indicate whether the firm’s position as an early mover is likely to be the basis of a sustainable competitive advantage, and explain why or why not.
1) A bank has issued the largest number of ATM cards in a large urban area. Banks view their ability to offer ATM cards as an important part of their battle for depositors, and in this market a customer’s ATM card for one bank does not work on the ATM systems of competing banks.
2) A firm has a 60% share of T3MP, a commodity chemical used to make industrial solvents. Minimum efficient scale is thought to be 50% of current market demand. Recently, a change in environmental regulation has dramatically raised the price of a substitute chemical that indirectly competes with T3MP. This undermines the market for the substitute, which is about twice the size of the market for T3MP.