How network externalities affect firm operating strategies

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Reference no: EM13199636

Explain why the cost structure associated with many kinds of information goods and services might imply a market supplied by a small number of large firms. At the same time, some internet businesses such as grocery home deliveries have continually suffered steep losses regardless of scale. Explain why.

Could lower transaction costs make it easier for small suppliers to compete?

Network externalities are often an important aspect of demand for information goods and servcies. The benefits to customers of using software, participating in electronic markets, or using instant messaging increase with the number of other users.

How might network externalities affect firm operating strategies pricing, output and advertising and firm size?

Reference no: EM13199636

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