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The Snob Effect
- If network is negative externality, a snob effect exists.
* The snob effect refers to desire to own unique or exclusive goods.
* The quantity demanded of snob good is higher the fewer the people who are having it.
Network Externalities and Demands for Computers and Fax Machines
* Examples of Positive Feedback Externalities
- Mainframe computers: 1954 - 1965
- Microsoft Windows PC OS
- Fax-machines and electronic mail
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Insurance - Risk averse are willing to pay to keep away from risk. - If cost of insurance equals expected loss, risk averse people will buy sufficient insurance to totally r
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Surplus The surplus is a condition under that supply for a good or service is in excess of the demand for that good or service. When this happens, there is commonly a reduction
Elasticities of supply and demand Other Demand Elasticities – Income elasticity of demand calculates the percentage change in quantity demanded resulting fro
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