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What is Direct Network Effects

Chapter 132
Encyclopedia of Networked and Virtual Organizations
When the economic utility of a product or technology increases as more customers start using it, this is referred to as a direct network effect.
Published in Chapter:
Network Effects
Erik den Hartigh (Delft University of Technology, The Netherlands)
Copyright: © 2008 |Pages: 7
DOI: 10.4018/978-1-59904-885-7.ch132
Abstract
From the 1980s, network effects attracted a lot of interest in economics and management sciences. This was mainly due to the work of Arthur (e.g., 1988, 1989, 1990). While the subject of increasing returns to scale in companies had a long tradition in economics, network effects (i.e., increasing returns in markets) had hardly been addressed.
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Chapter 170
What Makes the Platform Network Effects Unsustainable?: Winner-Take-All Strategies and Unpaid Complementors
Effects that an increase in usage leads to a direct increase in value for other users on the same side of the network.
Published in Chapter: What Makes the Platform Network Effects Unsustainable?: Winner-Take-All Strategies and Unpaid Complementors; From: Encyclopedia of E-Commerce Development, Implementation, and Management
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