Network Effect


When more persons make use of a service, it becomes more popular, thus attracting a multitude of adopters.


Grape-vine usually serves to give birth to the network effect. By an evaluation of a network’s span and potential development, the network effect can expand indirectly.

Although the grape-vine technique is usually valuable in the start, in later stages analysis is more helpful. Put differently, one might use a service because an acquaintance recommended it; then on, the person uses it because it is recommended by ‘everyone.

Helpful Articles to Understand Network Effect:

Network Externalities (Effects)
University of Texas at Dallas (1998)

Related Terms:

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