Among industries based upon digital technologies,the presence of network externalities is critical in determining whether the industry tends towards monopoly or fragmentation.

Question

Quizplus · Accepted Answer

The presence of network externalities in digital technology industries can lead to a winner-takes-all market, where one dominant company gains a significant market share due to the value derived from a large user base. This can lead to monopoly tendencies in the industry. In contrast, industries without significant network externalities are less prone to monopoly tendencies and may tend towards fragmentation.

Among Industries Based Upon Digital Technologies,the Presence of Network Externalities