Network effects occur when the value of a product or service increases as more people use it. This phenomenon is fundamental to the growth of many platforms, marketplaces, and social networks, where each new user adds incremental value for existing users. Network effects can be direct, as seen in communication tools where connectivity increases with each user, or indirect, such as in marketplaces where a growing number of buyers attracts more sellers and vice versa. Understanding network effects is crucial for analyzing why certain technologies or platforms achieve rapid adoption and sustain long-term competitive advantage.

Contexts

• #marketing-lexicon (See: @Marketing Glossary)