Prof. Andrei Hagiu // Boston University, USATo the profile
Data-enabled Learning, Network Effects, and Competitive AdvantageResearch Seminars
The paper presented in this MaCCI/EPoS Virtual IO Seminar provides a model of competition in which firms can improve their productsthrough learning from the data they obtain on customers they serve. The model isused to explore the implications for competitive dynamics of three new features of such learning compared to traditional learning-by-doing settings: (i) learning increasesa firm’s demand rather than reducing its marginal cost, (ii) firms can improve theirproducts for individual customers based on each customer’s particular usage experience, and (iii) the learning happens while a firm’s customers are still consuming the product. The authors show when and how network effects arise from these new features. They also analyzethe consequences of data sharing, as well as the role of consumer beliefs, the nature ofthe learning curve, and other factors that affect an incumbent’s competitive advantage.