Network Externalities

Network externalities occur when the value of a product or service increases as more people use it. For instance, a social media platform becomes more useful with more friends joining because you can connect and share with a larger group. This effect can lead to a "winner-takes-all" situation, where a single platform dominates the market. In general knowledge, it highlights how collective user participation can enhance an experience, making it more attractive for new users, thus creating a virtuous cycle of growth and value.