Web Chapter Flashcards
Information good
A good whose value comes from the information it contains
information goods costs
High fixed costs
Low marginal costs
*similar to natural monopolies*
Patents
Gives an inventor a temporary monopoly in the use or sale of the invention
Copyright
Gives the creator of a literary or artistic work sole rights to profit from that work
network externality
When the value of the good to an individual is greater when a large number of other people also use the good
Critical mass
The size at which a network suddenly begins to grow rapidly
Threshold network size
For a given individual it is the smallest number of current members in the network that leads the individual to join the network
*In a market subject to market externalities*
Tipping
Occurs when positive feeback due to network externalities causes consumers to swing to one of two competing goods or technologies
Positive feeback
Success breads success; failure breads failure
*Goods subject to network externalities*
Standard
A set of rules for operation that induces competing goods to operate as a single network
QWERTY problem
An industry that gets stuck into using an inferior standard
