PHIL 100 Study Guide - Quiz Guide: Orkut, Linkedin, Web Browser

• School: University of Maryland
• Department: Philosophy
• Course: PHIL 100
• Professor: danmoller

Document Summary

Network effect: more user=more value; also known as network externalities or. For example, you won"t care if someone has the same socks as you. However, when they are present they are among the most important reasons for buying a product. 3 main sources of value: exchange, staying power, complementary benefits. Exchange: a network becomes more valuable because its users can freely communicate with one another. Hence, information exchange is a vital source of value creation. Every product or service subject to network effects fosters some kind of exchange. For example, as each new facebook user comes online, the network becomes more valuable because its users can communicate with more people. Staying power: this is the long-term viability of a product or service. Networks with a greater number of users suggest a stronger staying power. Staying power is related to switching costs in that the better a company can create switching costs, the greater their staying power will be.