Network externalities exist when
A)the value of a product for a customer lies in how many others he can connect to.
B)the value of a product for a customer depends significantly on the number of other users of the same product.
C)there are large benefits to other customers.
D)there are huge drawbacks for other customers.

Question

Quizplus · Accepted Answer

Network externalities refer to the phenomenon in which the value a customer derives from a product increases as more people use the product. This can occur in various ways, such as through enhanced communication, compatibility with other systems, or access to a broader array of content or services. Option A is essentially a restatement of this definition, while options C and D are not accurate characterizations of network externalities.

Network Externalities Exist When