A network effect is an economic effect that describes a product or service where additional users add value to the network. When a network effect is present, each new user adds value to the product by entering the network. This, in turn, incentivizes new users to join the network, adding more value to it, and so on.
Types of network effects
There are two main types of network effects — direct and indirect network effects.
Direct network effects are increased usage adds value for all other users.
Indirect network effects are less easily defined. The term refers to additional, complementary benefits that stem from…

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