(Last Word): Network effects on the Internet:

Question

Quizplus · Accepted Answer

Network effects on the Internet tend to create winner-takes-all markets, where a few dominant players can capture a large share of the market due to the reinforcing feedback loops created by the network effects. This is the case with Google in search and Facebook in social networking, for example.

Option B is not the best answer as highly competitive markets are typically rare in the presence of network effects. Option C is incorrect as network effects tend to create economies of scale, not exhaust them. Option D is also not a correct answer as network effects create advantages for early movers and established players, rather than fostering a level playing field.

(Last Word): Network Effects on the Internet