More from the Author

• Working Paper | HBS Working Paper Series | 2013

  Competing with Privacy

  Ramon Casadesus-Masanell and Andres Hervas-Drane

  We analyze the implications of consumer privacy for competition in the marketplace. We consider a market where firms set prices and disclosure levels for consumer information and consumers observe both before deciding which firm to patronize and how much information to provide it with. The provision and disclosure of information presents tradeoffs for all market participants. Consumers benefit from providing information to the firm, as this increases the utility they derive from the service, but they incur disutility from information disclosure. This in turn benefits the firm providing an additional source of revenue, but reduces consumer demand for the service. We characterize equilibrium information provision, disclosure levels, and prices as a function of the consumer population's valuation for the service, and show that competition has three main effects on the marketplace. First, competition drives the provision of services with a low level of disclosure. Second, competition ensures that services with a high level of disclosure subsidize consumers. And third, higher competition intensity tends to increase the volume of consumer information disclosed by firms. Our findings are particularly relevant to the business models of Internet firms and contribute to inform the regulatory debate on consumer privacy.

  Keywords: Information Acquisition; information disclosure; Online Privacy; Privacy Regulation;

  Citation:

  Casadesus-Masanell, Ramon, and Andres Hervas-Drane. "Competing with Privacy." Harvard Business School Working Paper, No. 13–085, April 2013.

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• Article | Strategic Management Journal | April, 2013

  Business Model Innovation and Competitive Imitation: The Case of Sponsor-Based Business Models

  Ramon Casadesus-Masanell and Feng Zhu

  This paper provides the first formal model of business model innovation. Our analysis focuses on sponsor-based business model innovations where a firm monetizes its product through sponsors rather than setting prices to its customer base. We analyze strategic interactions between an innovative entrant and an incumbent where the incumbent may imitate the entrant's business model innovation once it is revealed. The results suggest that an entrant needs to strategically choose whether to reveal its innovation by competing through the new business model or conceal it by adopting a traditional business model. We also show that the value of business model innovation may be so substantial that an incumbent may prefer to compete in a duopoly rather than to remain a monopolist.

  Keywords: business model innovation; imitation; sponsor-based business model; strategic revelation; strategic concealment; Business Model; Innovation and Invention; Price; Competitive Strategy; Adoption; Value; Duopoly and Oligopoly; Product; Customers; Market Entry and Exit; Monopoly;

  Citation:

  Casadesus-Masanell, Ramon, and Feng Zhu. "Business Model Innovation and Competitive Imitation: The Case of Sponsor-Based Business Models." Strategic Management Journal 34, no. 4 (April, 2013): 464–482.

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• Teaching Note | HBS Case Collection | 2013 (Revised from original 2008 version)

  eHarmony (TN)

  Mikolaj Jan Piskorski and Hanna Halaburda

  Teaching Note for eHarmony [709424].

  Keywords: Business Model; Strategy; Valuation; Industry Structures; Competitive Advantage; Web Services Industry;

  Citation:

  Piskorski, Mikolaj Jan, and Hanna Halaburda. "eHarmony (TN)." Harvard Business School Teaching Note 709-446, January 2013. (Revised from original July 2008 version.)

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