Lecture 8 Flashcards Preview

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Flashcards in Lecture 8 Deck (12):
1

What is a network effect?

Means that the value of a network increase as its number of users does. So each additional user in the network increases the value of the network for other users.

2

What is Matcalfe's law?

V = n sqaured

3

What is a congestion effect?

It is a negative network effect. Each addition to the network actually reduces the value of the network. eg. traffic jam or bandwith

4

Three value sources in a network?

1. Exchange: a larger number of users results in a greater reach for exchanging products and services

2. Staying Power: a larger number of users suggests a strong market position. Linked to switching costs.

3. Complementary benefit: Additional third party products that provide additional value to the network users

5

What is meant by platform ecosystem? and how does this create an exchange of value?

Platforms actively encourage third-party providers to integrate products and services (apps) with their software, creating ecosystems.

6

What is an application programming interface (API)?

makes it easy to fit a product to a platform software.

7

What is a one-sided market?

large share of value of derived from a single class of users

8

What is a two-sided market?

Value is derived from two categories of network users

9

Same side exchange benefit?

increasing value to a class of users resulting from an increase in the number of users of that class.

10

cross side exchange benefit?

increasing value to a class of users resulting from an increase in the number of users of another class.

11

Positive feedback loops

An increase in A leads to an increase in B which leads to an increase in A

12

What does servitize mean?

to become the dominant platform provider the provides the product as a service