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Title: Direct network effects, small-world networks, and industry formation
Authors: Funk, J.L. 
Keywords: Critical mass
Internet mail
Inverse demand curve
Network effects
Small-world networks
Issue Date: Jun-2009
Citation: Funk, J.L. (2009-06). Direct network effects, small-world networks, and industry formation. Telecommunications Policy 33 (5-6) : 241-252. ScholarBank@NUS Repository.
Abstract: This paper addresses the formation of industries that involve direct network effects. Using two concepts from the literature on network effects (critical mass and inverse demand curves) and descriptive data from the formation of five telecommunication-related industries, this paper argues that a critical mass of users was created multiple times in these industries where multiple critical masses of users can be represented as local maximums in an inverse demand curve. The existence of these multiple local maximums reflects the existence of different sub-populations of users within a total population of potential users where these populations of users can be considered small-world networks. Initially the different sub-populations represent fragmented networks of users that are served by fragmented networks of firms. Over time connected networks of both firms and users emerge. © 2009 Elsevier Ltd. All rights reserved.
Source Title: Telecommunications Policy
ISSN: 03085961
DOI: 10.1016/j.telpol.2009.02.003
Appears in Collections:Staff Publications

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