network effect

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network effect

The resulting increased value of a product because more and more people use it. Telephones, fax machines, computer operating systems and smartphones have been prime examples. A product's success is more about compatibility and less about its superiority to the competition. For example, Microsoft became hugely successful due to the network effect, because more and more people bought Windows PCs, and developers began to write programs for Windows only or at least much earlier than for the Mac version. In contrast, owing to the network effect, the company has also suffered, because although Nokia Windows Phones are excellent devices, they have a tiny market share compared to iPhone and Android, and fewer developers create apps for Windows Phones as a result. See tipping point and network externality.
References in periodicals archive ?
Consider first the well-known situation without network externalities, where [[x.
Network externalities theory focuses on the economic effects of these systems.
EHR technology appears to fit this profile because fully interoperable sharing networks will not emerge as long as network externalities cause potential adopters to delay adoption as they wait for others to adopt first.
By contrast, net social welfare is not maximized in the presence of positive network externalities.
Fire sales externalities, strategic complementarities and network externalities imply that banks' investment and funding decisions fail to internalise the price effects and the amplification loops leading to debt markets freezes and ultimately to a liquidity crisis.
27) In this context, it is now undisputed that there must be indirect network externalities (or cross-platform externalities) to have a two-sided market: users' participation on one side increases the participation of users on the other side (and vice versa).
Flow and network externalities are added to the standard theory of planned behaviour to understand the intentions to use Whatsapp.
Accumulated ICT capital also builds the ICT infrastructure at the national level which generates network externalities and spillover effects across all firms and industries and thereby enhances the productivity in the aggregate economy.
Network effect or network externalities are similar concepts related to peer acceptance.
They analyze the US and Chinese currencies in terms of five factors required for reserve currency status: economic size, a well-developed financial system, confidence in the currency's value, political stability and network externalities.
A divorced economics professor applies the principles of microeconomics to his online search for a new life partner, attempting to find insights from search theory, signaling, adverse selection, statistical discrimination, supply and demand in thick markets, positive assertive matching, and network externalities.
Therefore, one of the main interests of the research project (1), specifically in the field of the generation of network externalities, is to analyze what indicators of science and technology applicable to research groups, allow recording and demonstrating in an optimum way the participation of the University in the generation of network externalities, to assess the contribution to interest groups and receiving communities immersed in the global environment, in other words, the impact.

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