When network externalities are available in a market,the typical outcome is:
A)A winner-take-all market
B)Monopolistic abuse requiring antitrust intervention
C)More rapid technological innovation
D)Lack of consumer choice

Question

Quizplus · Accepted Answer

When network externalities are present in a market, the typical outcome is a winner-take-all market, where one company dominates the market due to the strong network effects. This is because consumers tend to prefer the product that has the largest network of users, leading to a snowball effect where more users attract even more users. As a result, smaller firms are unable to compete, resulting in a monopoly-like situation. Therefore, option A is the best choice.

When Network Externalities Are Available in a Market,the Typical Outcome