Network externalities are critical phenomena because:
A)They create a positive feedback loop that leads to a winner-takes-all situation
B)They create a winner-takes-all situation which is unfair from a competition standpoint
C)Technological innovations tend to be resilient
D)Governments are more and more concerned about firms' corporate citizenship

Question

Quizplus · Accepted Answer

Network externalities create a positive feedback loop where the value of a product or service increases as more people use it. This leads to a winner-takes-all situation where one dominant firm may emerge, and smaller competitors are unable to compete effectively. This is critical because it can lead to reduced competition, decreased innovation, and consumer harm.

Network Externalities Are Critical Phenomena Because