network economics

Network economics analyzes how the value of a product or service increases as more people use it. This principle often applies to technology and platforms, like social media or online marketplaces. For instance, a social network becomes more valuable as friends and family join, enabling better communication and connection. The network effect can lead to monopolies, where one platform dominates because it attracts more users, creating a cycle of growth. This concept helps explain market dynamics in various sectors and guides businesses in fostering user engagement and expansion.