Some economists argue that the existence of network externalities is a surmountable barrier if a competing firm can offer a product that better satisfies consumer preferences.

Question

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Network externalities can create a barrier to entry in markets because the value of a product increases as more people use it. However, if a competing firm can offer a product that significantly better satisfies consumer preferences, it can overcome these barriers by attracting users away from the incumbent product, despite the network externalities.

Some Economists Argue That the Existence of Network Externalities Is