1. What are network effects? What are the other names for this concept? 2. List

Question

1. What are network effects? What are the other names for this concept?

2. List several products or services subject to network effects. What factors do you believe helped each of these efforts achieve dominance?

3. Which firm do you suspect has stronger end-user network effects: Google’s online search tool or Microsoft’s Windows operating system? Why?

4. Network effects are often associated with technology, but tech isn’t a prerequisite for the existence of network effects. Name a product, service, or phenomenon that is not related to information technology that still dominates due to network effects.


5. What are the factors that contribute to the value created by network effects?

6. Why is staying power particularly important to many technology products and services?

7. Think about the kinds of technology products that you own that are subject to network effects. What sorts of exchange do these products leverage (e.g., information, money, software, or other media)?

8. Think about the kinds of technology projects you own. What sorts of switching costs are inherent in each of these? Are these strong switching costs or weak switching costs? What would it take for you to leave one of these services and use a rival? How might a competitor try to lessen these switching costs to persuade you to adopt their product?

9. Which other terms are sometimes used to describe the phenomenon of switching costs?

10. Think about the kinds of technology products that you own that are subject to network effects. What sorts of complementary benefits are available for these products? Are complementary benefits strong or weak (meaning, do people choose the product primarily based on these benefits, or for some other reason)?

11. Identify firms that you believe have built a strong platform. Can you think of firms that have tried to develop a platform, but have been less successful? Why do you suppose they have struggled?

Explanation / Answer

1.A network effect (also called network externality or demand-side economies of scale) is the effect that one user of a good or service has on the value of that product to other people. When network effect is present, the value of a product or service is dependent on the number of others using it. 2. Social networking and telephone. 3.Google --don't benefit from network effects, but from economies of scale but windows has this effect as more software's are made according to compatibility needs of windows. 4. Stock exchanges, as more people use them transaction costs decrease. 5.

Related Questions

Navigate

• Browse (All)
• Browse 1
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.