Extensive network effects may drive a market toward natural monopoly because consumers tend to choose a common, standard product that everyone else is using.

Question

Quizplus · Accepted Answer

Network effects occur when the value of a product or service increases as more people use it, leading to a situation where a single product or service becomes overwhelmingly preferred by the majority of consumers, potentially resulting in a natural monopoly.

Extensive Network Effects May Drive a Market Toward Natural Monopoly