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In economics and business, a network effect (also called network externality or demand-side economies of scale) is the effect that one user of a good or service has on the value of that product to other people. When a network effect is present, the value of a product or service is dependent on the number of others using it.The classic example is the telephone. The more people who own telephones, the more valuable the telephone is to each owner.

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  • In economics and business, a network effect (also called network externality or demand-side economies of scale) is the effect that one user of a good or service has on the value of that product to other people. When a network effect is present, the value of a product or service is dependent on the number of others using it.The classic example is the telephone. The more people who own telephones, the more valuable the telephone is to each owner.
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