About this videoMarkets with network externalities have become extremely important in the world of economics and management. Robert S. Pindyck explains that network externalities do not compete in the market but for the market and mentions that the forces that affect consumers' choices do not only depend on the product itself but on how many other people use it. He shares the example of VHS and BETA markets as well as Microsoft Word and WordPerfect. He also analyzes both positive and negative network externalities and comments on the Rolex watches market. Finally, Pindyck discusses the competition process between firms by sharing a mathematical formula and explains the case of Sony and Phillips market for compact disks, and Sony and Toshiba market for high definition DVD. |
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CreditsMarkets and Network Externalities | |
