BU415 Chapter Notes - Chapter 4: Marginal Utility, Network Effect, Positive Feedback
Document Summary
Network economics: value is typically found in scarcity (ex. Diamonds, luxury goods: networks are different: value in plentitude, you won"t pay a lot for the first of something there will be more significant value the more people have something, ex. Railroad tracks, telephone wires: virtual networks: connections between network nodes are intangible, typically people rather than devices, sponsored by an organization or technology that enables it, size matters! The more nodes a network has, the more valuable it is to members: key terms, positive feedback: self-reinforcing mechanism by which the strong gets stronger and the weak gets weaker, relates to economies of scale, ex. Expedia providers and travellers need to be plentiful: platforms: two-sided networks with specific members on the two sides: users and developers, platform is a software foundation on which other software is built, ex. Operating systems are a platform for software applications: the more apps that developers build for a platform, the more attractive.
