Which of the following businesses is most susceptible to negative network effects?
A) Moonglow Shoes produces a line of lightweight running shoes that are endorsed by an Olympic gold medalist.
B) Clover Technologies produces computer processing chips and sells them to a variety of manufacturers for use in smartphones and other devices.
C) Green Tools manufactures solar powered gardening implements and sells them online.
D) Pics Match is a social media platform where users upload photos to the site and are matched with other users who have taken similar photos.

Question

Quizplus · Accepted Answer

The ability of a platform to evince and manage positive network effects is critical to producing value for each participant, and it allows it to gain and sustain a competitive advantage. In contrast, negative network effects describe the situation where more and more users exit a platform and the value that each remaining user receives from the platform declines. Because Pics Match relies on having a high number of users to create value for its customers, it stands to suffer the most from negative network effects if users abandon the platform.

Which of the Following Businesses Is Most Susceptible to Negative