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 ?
The problem is important from a methodological perspective, as there do not exist general purpose estimatable models of social dynamics in Economics which treat the network formation process as endogenous and simultaneously contemplate network effects on behaviour and its feedback on the network formation process.
Cross-sided network effects appear, since the participation on one side of those companies' market is dependent on the participation of the other side of their market (SCHIFF, 2003).
How do non-technology traditional businesses compete with the network effects of Amazon, Apple, Facebook and Google
These three elements are key; the market gives rise to similar legal practices, network effects standardize these practices, and reciprocity then helps sustain this legal order in the vacuum of centralized authority.
By choosing AVG's software and services, users become part of a trusted global community that benefits from inherent network effects, mutual protection and support.
Part 1 delves into competition policy and antitrust, with papers on switching costs and network effects in competition policy and the economics of pending patents.
The apex bank said, 'Canada is a small currency area with non-existing network effects, trade with Canada is very limited, and the two countries' business cycles have little in common.
The lCD's CJ2 Regional Network Effects Cell developed an expanded social network database for Eastern Afghanistan, including "other" individuals beyond the insurgency that could be engaged, influenced, leveraged or positively reinforced-thus taking a comprehensive, multi-faceted approach to targeting.
Faulhaber almost got there in discussing network effects.
The purpose of this research is to explore variation in the influence of network effects across competitive settings.
Courtesy of network effects, the explosive growth of the iTunes App Store.
de Montreal) explores the possibility that Western history has been significantly revised by the Information Age in this book, which charges that technology has influenced both scale economies and network effects.

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