A significant downside to network externalities is that
A) there may be large switching costs to consumers for changing products so that consumers end up using products with inferior technologies.
B) firms may network with unethical suppliers or distributors.
C) the costs of hiring celebrity endorsements may be very high.
D) there may be large switching costs to firms changing technologies.

Question

Quizplus · Accepted Answer

Network externalities can create high switching costs for consumers who want to switch to a product with better technology or features. This can lead to a situation where consumers continue to use products with inferior technology simply because the costs of switching to a new product are too high. This can ultimately harm competition and lead to reduced innovation in the marketplace.

A Significant Downside to Network Externalities Is That