Rivalry, Market Structure and Innovation : The Case of Mobile Banking

This paper focuses on a novel phenomenon — mobile banking diffusion — to illuminate unresolved questions: whether rivalry and market structure affect the diffusion of a new technology, and if so, under what conditions. Using a unique, hand-collected dataset from the iTunes Store for 2008-2012, this study provides evidence that the adoptions of mobile banking apps by rivals spur future adoptions. This effect is particularly strong in concentrated markets, where banks compete on non-price attributes. These results are robust to the application of instrumental variables that address the possibility that adoptions are merely simultaneous reactions to the same common forces