Network effects arise in an industry where:
A) the size of the network of complementary products is a primary determinant of demand for an industry's product.
B) a large network of companies in an industry use the same business model and strategies.
C) a company is able to adhere to the same technical standards across its network of outlets.
D) companies network together and lobby for establishing certain technical standards.
E) companies that are not in favor of a technical standard network together.

Question

Quizplus · Accepted Answer

Network effects arise when the value of a product or service increases as more people use it. In industries with network effects, the demand for a product or service is driven by the size of the network of complementary products or services. The more people use these complementary products or services, the more valuable the industry's product or service becomes. Therefore, choice A is the best answer. The other choices do not accurately describe the concept of network effects.

Network Effects Arise in an Industry Where