Network Externalities

question 97

Multiple Choice

Network externalities

• A)explain why switching costs fall as the size of a network increases
• B)are the service-industry equivalent of natural monopolies in goods-producing industries
• C)are more important in the short run than in the long run
• D)help explain why monopolies often do not last for very long
• E)can explain the dominance of existing firms in some industries

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Definitions:

Bootstrapping

A method of financing a startup or new venture by using personal funds or operating revenues rather than seeking external investment.

Competitive Advantages

Unique attributes or capabilities that allow an organization to outperform its competitors.

Raw Start-up

A very early stage startup without a fully developed product, business model, or customer base, typically exploring a market opportunity.

High-growth Company

A business that experiences significantly higher than average rates of growth in revenue or other critical metrics.