To have a monopoly, barriers to entering the market must be so high that no other firms can enter. Do network externalities create or remove barriers to entry?

Question

Computers & Technology

Oscar

5 September, 12:24

To have a monopoly, barriers to entering the market must be so high that no other firms can enter. Do network externalities create or remove barriers to entry?

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Answers (1)

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Maddison Miles · Answer 1

With network externalities we can create barriers to entry.

Explanation:

Network externalities are important to create a barrier to entry and get enough clients from the beginning.

These clients will use your product, in this way your product will have more value and more people going to know it and use it.

We are going to have a high barrier against the other firms, is a good way to start a monopoly.