Network Externality: An Uncommon Tragedy

Stan J Liebowitz () and Stephen E Margolis

Journal of Economic Perspectives, 1994, vol. 8, issue 2, pages 133-50

Abstract: Economists have defined 'network externality' and have examined putative inframarginal market failures associated with it. This paper distinguishes between network effects and network externalities, where the latter are market failures. The authors argue that while network effects are important, network externalities are theoretically fragile and empirically undocumented. Some network externalities are merely pecuniary. Network ownership or transactions among network participants can internalize some network effects. The type of market failure that has been associated with these externalities is a transition problem that has little to do with externality. Copyright 1994 by American Economic Association.

Date: 1994
View citations in EconPapers

Downloads: (external link)
http://links.jstor.org/sici?sici=0895-3309%2819942 ... 0.CO%3B2-W&origin=bc full text (application/pdf)
Access to full text is restricted to JSTOR subscribers. See http://www.jstor.org for details.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: http://EconPapers.repec.org/RePEc:aea:jecper:v:8:y:1994:i:2:p:133-50

Ordering information: This journal article can be ordered from
http://www.aeaweb.org/subscribe.html

Access Statistics for this article

Journal of Economic Perspectives is edited by David Autor

More articles in Journal of Economic Perspectives from American Economic Association
Contact information at EDIRC.
Series data maintained by Christopher F. Baum ().