The demand-side dynamics of entrant heterogeneity

Differences in demand conditions between the early and later parts of the demand-growth stage of an industry's life-cycle generate three sets of hypotheses about industry entrants. These differences in demand conditions explain why later industry entrants differ in their vertical scope, in their product offerings, and in their geographic scope. The hypotheses are tested in the context of the post-divestiture US Long Distance Telecommunications Services industry during 1984-1996. The tests control for firm-specific explanations of industry entrants' characteristics and the results are consistent with the main hypotheses.