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THE ECONOMICS OF NETWORKS: A SURVEY OF THE EMPIRICAL LITERATURE
Author(s) -
Birke Daniel
Publication year - 2009
Publication title -
journal of economic surveys
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.657
H-Index - 92
eISSN - 1467-6419
pISSN - 0950-0804
DOI - 10.1111/j.1467-6419.2009.00578.x
Subject(s) - economics , value (mathematics) , product (mathematics) , empirical research , work (physics) , marketing , new product development , industrial organization , management science , public economics , business , computer science , engineering , mechanical engineering , philosophy , geometry , mathematics , epistemology , machine learning
Network effects, the increase in value of consuming a product if many other consumers use the same product, are a feature of many markets and in particular of many high‐technology products. This paper surveys the burgeoning empirical literature that has developed especially during the last years. After theoretical work dominated the earlier years of research in this area, newer research has combined theoretical models with empirical studies and applied work with direct implications for public policy, marketing and company strategies. Furthermore, insights from the study of social networks have been applied to analyse how consumers interact with each other. The paper argues that a closer analysis of the network structure of consumer interaction promises fruitful future research avenues and advances in our understanding of how network effects operate.