Network effects arise in industries where:
A) the size of the network of complementary products is a primary determinant of demand for an industry's product.
B) a large network of companies in an industry use the same business model and strategies.
C) a company adheres to the same technical standards across its network of outlets.
D) companies network together and lobby for establishing certain technical standards.
E) companies that are not in favor of a technical standard network together.

Question

Quizplus · Accepted Answer

Network effects occur when the value of a product or service increases as more people use it, and this is especially true for industries where the demand for a product is dependent on the size of the network of complementary products. For example, social media platforms like Facebook and Twitter have stronger network effects as more people join the platform, as this increases the value of the platforms for users, advertisers, and third-party developers.

Network Effects Arise in Industries Where