Potential Competitors in Preemption Games∗

The purpose of this paper is to study the adoption of a new technology by a firm when the competitor comes into play at a random date that can be seen as her birth date. The presence of a competitor is thus only revealed when she invests. We show that there exists a unique Bayesian equilibrium that can be split into three stages. No firm will invest before a threshold T ∗ 1 even if she is born before. After another threshold T ∗ 2 that is strictly less than the date that maximizes the expected payoff function, any firm immediately invests at birth. In between, the equilibrium is in mixed strategies. On [T ∗ 1 , T ∗ 2 ], newborn firms compete with firms that were born earlier.