Suppose that a one-way network leads to the development of a number of new complementary products and services.This phenomenon is known as:
A) a direct network externality.
B) an indirect network externality.
C) a reputation effect.
D) lock-in.

Question

Quizplus · Accepted Answer

An indirect network externality occurs when the adoption and use of a product or service creates opportunities for complementary goods or services to be developed. In this case, the one-way network is leading to the development of new complementary products and services, indicating an indirect network externality. Direct network externalities occur when the value of a product or service increases as more people use it, while lock-in refers to a situation where customers become dependent on a product or service and cannot easily switch to alternatives. Reputation effect describes a phenomenon where a product or service gains value based on its perceived quality or the opinions of others.

Suppose That a One-Way Network Leads to the Development of a Number