Which BEST explains why monopolies or oligopolies tend to dominate the market for network goods?
I. Their products are the most likely to be compatible with other products.
II. They produce the "best" products in terms of quality and compatibility.
III. The power of coordination is so strong that monopolists and oligopolists can dominate the market even when they charge prices higher than their competitors.
A) I only
B) I and II only
C) I and III only
D) I, II, and III

Question

Quizplus · Accepted Answer

Network goods are characterized by positive network effects, which means that the value of the good increases as more people use it. This creates a "winner-takes-all" situation where a single dominant firm or a small group of firms can obtain significant market power. The dominant players can leverage their market power to ensure compatibility with other products, and they can use the power of coordination to maintain their dominance even when charging higher prices than competitors. While quality may also play a role in their dominance, it is not necessarily the most important factor.

Which BEST Explains Why Monopolies or Oligopolies Tend to Dominate