The paper examines the relationship between network externalities and the value ofthe World-Wide Web. It is shown that value depends on two offsetting effects. First,as the Web grows in size, so existing users gain from the additional content providedby new users. This is the standard concept of a network externality. However, at thesame time, a large and expanding network can suffer from congestion. Congestioncan manifest itself in the time taken to download information from the Web. But anarguably more important problem is navigating the very large number of webpages onoffer and to identify the particular page containing information that is of interest.These navigation issues have serious implications for the continued growth of theWeb, as described by Metcalfe’s Law.
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Paper provided by Maastricht : MERIT, Maastricht Economic Research Institute on Innovation and Technology in its series Research Memoranda with number
009.
References listed on IDEAS Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
Nicholas Economides, 1995.
"The Economics of Networks,"
Working Papers
94-24, New York University, Leonard N. Stern School of Business, Department of Economics, revised Sep 1995.
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