Document Type
Article
Publication Date
11-11-2020
Abstract
This Chapter begins by examining and exploring the theoretical and empirical limits of the possible bases of network effects, paying particular attention to the most commonly cited framework known as Metcalfe’s Law. It continues by exploring the concept of network externalities, defined as the positive external consumption benefits that the decision to join a network creates for the other members of the network, which is more ambiguous than commonly realized. It then reviews the structural factors needed for models based on network effects to have anticompetitive effects and identifies other factors that can dissipate those effects. Finally, it identifies alternative institutional forms that can eliminate or mitigate the impact of network effects.
Keywords
Antitrust law & poicy, economics of networks, externalities, Metcalfe's Law, competition, market failures, consumer welfare
Publication Title
The Global Antitrust Institute Report on the Digital Economy
Repository Citation
Yoo, Christopher S., "Network Effects in Action" (2020). All Faculty Scholarship. 2236.
https://scholarship.law.upenn.edu/faculty_scholarship/2236
Included in
Antitrust and Trade Regulation Commons, Communication Technology and New Media Commons, Digital Communications and Networking Commons, Economic Theory Commons, Industrial Organization Commons, Internet Law Commons, Law and Economics Commons, Science and Technology Law Commons, Social Media Commons, Technology and Innovation Commons
Publication Citation
The Global Antitrust Institute Report on the Digital Economy 5