Network Effect
Network externalities resemble economies of scale, but they are not considered such because they are a function of the number of users of a good or service in an industry, not of the production efficiency within a business. Economies of scale external to the firm (or industry wide scale economies) are only considered examples of network externalities if they are driven by demand side economies.
Read more about this topic: Returns To Scale
Famous quotes containing the words network and/or effect:
“Parents need all the help they can get. The strongest as well as the most fragile family requires a vital network of social supports.”
—Bernice Weissbourd (20th century)
“I don’t know what effect these men will have upon the enemy, but, by God, they terrify me.”
—Arthur Wellesley, 1st Duke Wellington (1769–1852)