Network effect

Network effect in the European Union Law

Concept of Network effect provided by the “Glossary of terms used in EU competition policy” (Antitrust and control of concentrations, published in 2002): Network effects arise when a product is more valuable to a user, the more users adopt the same product or compatible ones. Economists refer to this phenomenon as a network externality, because when additional consumers join the network of current consumers they have a beneficial 'external' impact on the consumers who are already part of the network.