Publications
Publications
- 2018
- The Palgrave Encyclopedia of Strategic Management
Network Effects
By: Andrei Hagiu and David B. Yoffie
Abstract
Network effects are a key economic and strategic phenomenon in 'new economy' industries. They can, but do not necessarily, lead to market tipping, unless they outweigh customers' benefits from differentiation and are accompanied by high switching and multi-homing costs. Network effects create the possibility for multiple equilibrium market configurations, which are crucially determined by market participants' EXPECTATIONS. While in some markets network effects are exogenously given, in other markets their existence and magnitude is endogenously determined by firms' strategic choices.
Keywords
Citation
Hagiu, Andrei, and David B. Yoffie. "Network Effects." In The Palgrave Encyclopedia of Strategic Management. Continuously updated edition, edited by Mie Augier and David J. Teece. Palgrave Macmillan, 2017. Electronic. (Pre-published, October 2013.)
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