Which statement best describes the relationship between network effects and innovation?
A) Network effects decrease innovation within a standard but increase the number of innovative offerings that compete against a strongly established standard.
B) Network effects increase innovation within a standard but decrease the number of innovative offerings that compete against a strongly established standard.
C) More often than not, network effects foster innovation
D) More often than not, network effects limit innovation

Question

Quizplus · Accepted Answer

Network effects can increase innovation within a standard as they create a larger user base that can attract more complementary goods and services, enhancing the value of the network. However, they can also decrease the number of innovative offerings that compete against a strongly established standard because the high user base of the established network creates a barrier to entry for newcomers, making it harder for them to compete.

Which Statement Best Describes the Relationship Between Network Effects and Innovation