A network externality acts as a barrier to entry.

Question

Quizplus · Accepted Answer

A network externality occurs when the value of a good or service increases as more people use it. This creates a barrier to entry for new competitors, as they need to attract enough users to reach a critical mass before they can offer a comparable value to the existing product or service. The network externality thus gives established businesses a competitive advantage by making it difficult for new entrants to gain traction in the market.

A Network Externality Acts as a Barrier to Entry