Markets Where Strong Network Effects Are Present Often Exhibit a Winner-Take-All

question 14

Essay

Markets where strong network effects are present often exhibit a winner-take-all or winner-take-most dynamic. What network effects-related advantages can a dominant incumbent enjoy that help it repell rivals, and why is it so difficult for a newcommer to displace the dominant player in these markets?

---

Definitions:

Accumulated Depreciation

The total amount of a tangible asset's cost that has been allocated as depreciation expense over the asset's useful life.

Tax Rate

The percentage at which an individual or corporation is taxed by the government.

Tax Purposes

Refers to the reasons or contexts in which financial and operational information is gathered and analyzed to comply with tax laws and regulations.

Accumulated Depreciation

The total amount of depreciation expense that has been recorded against a fixed asset over its useful life.