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Published online by Cambridge University Press: 05 October 2021
In this chapter, we analyze various forms of network effects. As a network effect is an external effect, it is important to identify the economic agent who generates it (the “originator”) and the one who is affected (the “receiver”). If originator and receiver are seen to belong to a common group of agents, one talks of a “within- group” network effect; otherwise, if they are seen to belong to different groups, one talks of a “cross-group” network effect. In both cases, it is also crucial to determine whether network effects are positive or negative. Crossing the two dimensions (within- vs. cross-group and positive vs. negative), we obtain a number of typical situations, which we describe in Sections 1.1 and 1.2. We then confront these typical situations to the reality and, on this basis, we propose a definition of platforms and ways to categorize them in Section 1.3.
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