Question

Network externalities can set off a _____: if a firm can attract enough customers initially, it can attract additional customers because the value of its product has been increased by more people using it, which attracts even more consumers and so on.

Answer 1

Network externalities can set off a positive feedback loop, where attracting enough customers initially leads to attracting additional customers due to the increased value of the product.

Step-by-step explanation:

Network externalities can set off a positive feedback loop: if a firm can attract enough customers initially, it can attract additional customers because the value of its product has been increased by more people using it, which attracts even more consumers and so on.