Network externalities
A)explain why switching costs fall as the size of a network increases
B)are the service-industry equivalent of natural monopolies in goods-producing industries
C)are more important in the short run than in the long run
D)help explain why monopolies often do not last for very long
E)can explain the dominance of existing firms in some industries

Question

Quizplus · Accepted Answer

Network externalities can lead to the dominance of existing firms because the value of a product or service increases as more people use it, creating a barrier for new entrants.

Network Externalities