Competition in the presence of Network Effects

Abstract

The moment I heard the phrase ''network effects'', in the classroom, I was instantly hooked! As with any new concept that I am being introduced to, I started making scenarios in my head about its nature and its implications. I was so much into it, that I stopped paying attention to my professor. Unlucky me, exactly that time, my professor looked at me and asked; ''Can you tell me one good that exhibits network effects ? ''. I don't really remember what I was thinking until then, however I do remember my exact thoughts before I answer the question;''…network…good… the telephone! '' I answered... Lucky me! I was right! Hence I was off the hook…not quite off the hook though; I didn't stop thinking about it until I decided to spend my dissertation time trying to find out more about it. The following text is just the outcome of this decision.