What is a network good? How might a network good make it possible for a monopoly...

What is a network good? How might a network good make it possible for a monopoly to emerge?

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Expert Solution

A network good is a product whose value increases as more and more people start using it. For example, Twitter and Facebook are network good. As these platforms have more and more subscribers the value of these products will increase. Thre will be more content and that new contents will attract more people to the platform.

How a network good makes it possible for a monopoly to emerge ??

Monopoly is created when there are huge barriers to entry. In a network good like Facebook which already has a huge network creates a much bigger content and as they are created by so many users the cost of such content for Facebook is Zero. But, if a new Social media platform comes in they will not have the benefit of a large consumer base. Making it difficult for them to create content and even costly.

Users will stick to those networks which have large consumer base and this will prevent any new entrant in the market. Making a monopoly.

Rahul Sunny answered 1 year ago

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