Network effects

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Network effects are present when a product becomes more useful to consumers in proportion to the number of people using it. There are two types:

  • Direct network effects
    • The strength of direct network effects depends on the number of users. An example is a mobile phone: the more people can be reached mobile, the better
  • Indirect network effects
    • Similar effects apply to Complementary Assets. The value of these assets increases as the installed user base increases.

Part of Early mover effects