A network effect is a characteristic that causes a
good or
service to have a
value to a potential
customer which depends on the number of other customers who own the good or are users of the service. In other words, the number of prior adopters is a term in the value available to the next adopter.One consequence of a network effect is that the purchase of a good by one
individual indirectly benefits others who own the good — for example by purchasing a
telephone a person makes other telephones more useful. This type of
side-effect in a
transaction is known as an
externality in
economics, and externalities arising from network effects are known as network externalities. The resulting
bandwagon effect is an example of a
positive feedback loop.
See more at Wikipedia.org...
Free Download Now!
