A single person’s effect from using a good or a service on the total perceived value of that product or service for others. The more people who use a product or service, the higher its value becomes to a similar group. Some examples are the telephone and social networks. As a larger group uses a telephone, it becomes more essential to a larger group. As more people join a social network, the site holds greater value to the people who belong. Also known as network externality.
Link to This DefinitionDid you find this definition of NETWORK EFFECTS helpful? You can share it by copying the code below and adding it to your blog or web page.
Written and fact checked by The Law Dictionary