Business Model Innovation and Competitive imitation Flashcards
Types of innovations
new products, new production methods, new supply sources, exploitation of new markets, and new business organizations.
What does business model innovation focus on?
finding new ways to generate revenue and define value propositions for the customers, suppliers, and partners. Innovative business models can provide the basis for sustainable business success, but they can also be imitated.
Definition monitization intensity
the size of the cost imposed to customers in exchange for the free product.
Definition strategic revelation
the situation where the entrant prefers to compete through the new business model when it would choose not to do so if the incumbent was expected to continue competing through the traditional model.
Definition strategic concealment
a situation where the entrant prefers not to compete through the new business model when it would choose to do so if the incumbent was expected to continue competing through the traditional model.
When can a duopoly be more profitable?
When competitors complement each other through business model innovation and the products differ vertically
When is an agent unaware of something?
if they don’t know it and they don’t know that they don’t know it.
Definition platforms
institutions that act as intermediaries to enable transactions between multiple sides of a market.
When are business model innovation more likely to be revealed?
when the quality of the innovators’ product is high.
What if the entrant chooses the traditional business model?
the incumbent is strictly worse off in a duopoly, as it does not learn the innovation and has to compete with a product with a postive net quality. When firms compete with different business models, competition may be beneficial to both firms (and their consumers).
