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Networks, Noise and Navigation: Sustaining Metcalfe’s Law through Technological Innovation

Author

Listed:
  • Windrum, Paul
  • Swann, Peter

    (MERIT)

Abstract

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.

Suggested Citation

  • Windrum, Paul & Swann, Peter, 1999. "Networks, Noise and Navigation: Sustaining Metcalfe’s Law through Technological Innovation," Research Memorandum 009, Maastricht University, Maastricht Economic Research Institute on Innovation and Technology (MERIT).
    • Handle: RePEc:unm:umamer:1999009
    as

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    File URL: https://unu-merit.nl/publications/rmpdf/1999/rm1999-009.pdf
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    References listed on IDEAS

    as
    1. Shurmer, M & Swann, P, 1995. "An Analysis of the Process Generating De Facto Standards in the PC Spreadsheet Software Market," Journal of Evolutionary Economics, Springer, vol. 5(2), pages 119-132, June.
    2. Katz, Michael L & Shapiro, Carl, 1985. "Network Externalities, Competition, and Compatibility," American Economic Review, American Economic Association, vol. 75(3), pages 424-440, June.
    3. Joseph Farrell & Garth Saloner, 1985. "Standardization, Compatibility, and Innovation," RAND Journal of Economics, The RAND Corporation, vol. 16(1), pages 70-83, Spring.
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    Cited by:

    1. Scala, Antonio & Delmastro, Marco, 2024. "Modelling the growth of the network value," Chaos, Solitons & Fractals, Elsevier, vol. 185(C).
    2. Swann, G. M. Peter, 2002. "The functional form of network effects," Information Economics and Policy, Elsevier, vol. 14(3), pages 417-429, September.
    3. Andrea Bonaccorsi & Cristina Rossi, 2002. "The Adoption of Business to Business E-Commerce: Heterogeneity and Network Externality Effects," LEM Papers Series 2002/12, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
    4. Berranger, Pascale de, 2002. "The adoption of e-business technology by SMEs," Research Memorandum 033, Maastricht University, Maastricht Economic Research Institute on Innovation and Technology (MERIT).

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