The natural state of a market where network effects are present is for there to be intense competition between several rivals that come to an equalibrium where their respective market shares are roughly identical. A) TrueB) False

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Business

Anabella Whitney

30 January, 10:21

The natural state of a market where network effects are present is for there to be intense competition between several rivals that come to an equalibrium where their respective market shares are roughly identical. A) TrueB) False

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Jaylene Hamilton · Answer 1

False

Explanation:

The reason is that the network effect increases the value driven from a product when the users of the product grows. So the intense competition will come to equilibrium when the network effect is lower because the user needs are lower and the value required is also lower. So the market will be competing on prices to increase the demand of their product.