ECON-200 Lecture Notes - Lecture 15: Strategic Dominance, Oligopoly, Externality
Document Summary
Occurs when the number of customers who purchase a good influences the quantity demanded. Often is a factor in whether the resulting market structure is oligoly. Such as cell phones and fax machines. A new technology has to reach critical mass before it is effective for consumers. Individual preferences for a good increase as the number of people buying the good increases. Internal, social networks, cell phones, fax machines, mmorpgs, video game consoles, fads, night clubs. Individual preferences for a good decrease as the number of people buying the good increases. Pool, beach student union gets too crowded and you don"t want to go. Costs that are incurred by a consumer when he switches suppliers. Another advantage to a firm having a large network. Demand for existing product becomes more inelastic if costs of switching to a new product are higher.
