What advice would you give to a firm that wants to exploit network effects?
A) Charge heavy license fee for new technology.
B) Refrain from using technical standards.
C) Create incentives for other firms to develop complementary products.
D) Do not use aggressive marketing strategies for killer applications.
E) Increase switching costs.

Question

Quizplus · Accepted Answer

Creating incentives for other firms to develop complementary products can help in building a strong network effect. This can lead to more users coming to the platform, which in turn attracts more complementary products, leading to a positive feedback loop. This approach has been successful for companies like Apple and Amazon. The other choices can have negative effects like discouraging adoption and increasing switching costs which can lead to users leaving the platform.

What Advice Would You Give to a Firm That Wants