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)
“Nothing could his enemies do but it rebounded to his infinite advantage,—that is, to the advantage of his cause.... No theatrical manager could have arranged things so wisely to give effect to his behavior and words. And who, think you, was the manager? Who placed the slave-woman and her child, whom he stooped to kiss for a symbol, between his prison and the gallows?”
—Henry David Thoreau (1817–1862)