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What are network externalities in economics?

What is an example of a positive externality?

  • The telephone is a classic example where a greater number of users increases the value to each. When a customer purchases a telephone, a positive externality is created. The online social network is another example where the value is increased with each new user.

What is an example of a positive network effect?

  • This is called the positive network externalities or the network effect. A mobile network is an example where this concept applies. The more users a mobile service provider has the higher its value. The telephone is a classic example where a greater number of users increases the value to each.

What are the network externalities of fashion?

  • Network externalities can arise through a fashion or stylishness. The desire or demand for wearing jeans by girls is influenced by the number of other girls who have chosen to wear them. Wearing jeans have become a fashion among the college going girls at metropolitan cities in India.

image-What are network externalities in economics?
image-What are network externalities in economics?
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