Week 12 Flashcards
1
Q
What is Metcalfe’s law?
A
The value of a telecom network is proportional to the square of the number of users
2
Q
What do the Lerner Indices show us in the case of platform networks?
A
An increase in price on one side will tend to decrease with the elasticity of demand
3
Q
Why may a network offer one side for free?
A
To get as many people on board as possible, as you want to maximise the user base in the most efficient manner to exploit network externalities
