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network effect
(redirected from Network externalities)

   Also found in: Wikipedia 0.01 sec.
network effect
The resulting increased value of a product because more and more people use it. Telephones, fax machines and computer operating systems are examples. A product's success is due to compatibility and conformity issues, not that the product or technology may be superior or inferior to the competition. For more on the subject, read "Winners, Losers & Microsoft" by Stan J. Liebowitz and Stephen E. Margolis, published 1999 by The Independent Institute, Oakland, CA (ISBN 094599980-1). See tipping point and network externality.


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Network externalities are obvious when we think of telecoms and the internet: the more people aeconnectedAE the greater the value of the service.
This may be true in certain telecommunications markets, where network externalities and benefits from compatibility are colossal.
The economic perspective is represented by network externalities, extending local network analysis, and how technology start-up firms may overcome direct and indirect network externalities.
 
 
 
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