Network Economies

1. Collective Switching Costs

1.1. "The biggest single force working in favor of incumbents"

1.2. Coordination costs

2. Perfomance vs. Compatibility

2.1. Revolution: Making the best product

2.2. Evolution: May not have the best product but it ensures compatibility for the customers

3. Legal Obstacles

3.1. Legal rights for the product

3.2. Some old products are completely protected and you can't mimic or improve a product alike. (Example: Philips and Sony CD player)

4. Openness vs. Control

4.1. Lock-in products

4.2. Make necessary interfaces and specifications available to others

5. Positive Feedback

5.1. The strong gets stronger

5.2. The demand-side of economics

6. Negative Feedback

6.1. The strong get weaker

6.2. The weak get stronger

7. Network Externalties

7.1. Virtual networks share many properties with real networks = "Network"

7.2. One market affects others without compensation being paid = "Externalities"