Talk:Network effect

Market tipping
Someone has included multiple refeferences to 'market tipping', which seems to be a euphemism for a monopoly and is not an accepted term in economics. I have changed most of them.

Identifying the network
The credit card example has a few issues in its writing mechanics, including a sentence fragment and a viscous line of reasoning but its real problem is mistaking the credit card for the network unit. The network unit is the payment machine, or card reader, each of which communicates with the credit card payment center, forming a centralized network. The credit card is important to identify the customer, but the thought expressed by "Each additional person uses the same credit card, the value of rest people who use the credit card will increase" is a non-sequitur. For example, more cardholders could hypothetically overload the network, impeding transactions that it wouldn't with fewer cardholders. The machine is useful to the merchant because it facilitates payment, increasing sales. And it guarantees all payments authorized at the time of sale - even if the card is later determined to have been used fraudulently by the customer. The more merchants that have this machine and can therefore accept credit cards as payment, the more useful and more valuable the payment network becomes - to the owner of the network, such as Visa Intl. This is the main network effect. The cardholder doesn't directly benefit from more cardholders using the network. The cardholder can benefit directly from extra card readers being added to the network, but the customer technically doesn't even own the card! There is no network among the cards or cardholders, so the benefit cannot be directly attributed to the network effect. The credit card company can also be seen to benefit from greater numbers of cardholders, but again not a direct result of the network effect. Fairthomas (talk) 07:25, 18 July 2022 (UTC)

Unclear formulation in section Negative network externalities
The cited part: "Besides, Negative network externalities has four characteristics, which are namely, more login retries, longer query times, longer download times and more download attempts." in the section on Negative network externalities is rather poorly connected to the surrounding text and jumps at the reader with no prior introduction or explanation. It is not clear how it supposed to support or complement the topic. I ask for consensus to tie the cited part if possible coherently together to support the text, and if not, to delete it.

The following is a part of the section which surrounds the unclear part (emphasis mine):

negative network externalities create negative feedback and exponential decay. In nature, negative network externalities are the forces that pull towards equilibrium, are responsible for stability, and represent physical limitations keeping systems bounded.

Besides, Negative network externalities has four characteristics, which are namely, more login retries, longer query times, longer download times and more download attempts. Therefore, congestion occurs when the efficiency of a network decreases as more people use it, and this reduces the value to people already using it. Traffic congestion that overloads the freeway and network congestion on connections with limited bandwidth both display negative network externalities. Kubis (talk) 06:05, 28 March 2023 (UTC)


 * I agree that the sentence you've highlighted is jarring. I also don't see that it is supported by the reference, at least not based on the abstract I have access to. According to the reference, the counter forces are not just performance of the technology but also behavior of the (new) participants using the technology. ~Kvng (talk) 14:10, 31 March 2023 (UTC)
 * There appear to have been two subsequent revisions by @Audestadj to the section that is the subject of this discussion. The edits in question are these ones: 1 2. First one clarifies the beginning of the section while removing the disputed text (and apparently attempting to place it into references?). The second edit replaces the disputed text back after the revised text at the beginning of the section without any changes.
 * I consider the first edit a lukewarm improvement to the section, nonetheless the main disputed text remains unclear and hanging, so for lack of time in the present to research the topic, I am going to go ahead and wrap this in a non sequitur with a link to this discussion.
 * Kubis (talk) 05:33, 1 December 2023 (UTC)