Network externalities are often:
A)separate from positive feedback.
B)a reason for natural monopolies.
C)less likely to be in the communications or technology industries than in other industries.
D)less likely to move toward market domination.

Question

Quizplus · Accepted Answer

Network externalities refer to the positive effects that a product or service has on its users as more people use it. In the case of natural monopolies, it means that as more people use a product or service, it becomes more costly for competitors to enter the market and offer a viable alternative. This gives the company with the established user base a significant advantage and can lead to market domination. Therefore, network externalities are often a reason for natural monopolies.

Network Externalities Are Often