What Advice Would You Give to a Firm That Wants

question 26

Multiple Choice

What advice would you give to a firm that wants to exploit network effects?

• A) Charge heavy license fee for new technology.
• B) Refrain from using technical standards.
• C) Create incentives for other firms to develop complementary products.
• D) Do not use aggressive marketing strategies for killer applications.
• E) Increase switching costs.

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Definitions:

Partnerships

A business organization in which two or more individuals own and operate the business together, sharing in profits and liabilities.

Corporations

Legal entities that are separate from their owners, with the ability to own property, incur liabilities, and sell stock.

Corporation

A business firm that is a legal person. Its chief advantage is that each owner’s liability is limited to the amount of money he or she invested in the company.

Stockholders

Individuals or entities that own shares in a corporation, possessing ownership interests and rights to dividends.