Question

Facebook and other social media companies can (and have) experience(d) “explosive” market share growth (and collapse.) Many economists have ascribed such explosive growth on so called “network effects” or “network goods.”   Briefly explain what network goods are, how they differ from other goods or services and how “network effects” can cause rapid market share expansion (or collapse).

Answer 1

Network goods are those goods where increased number of users in the market increase the value of those goods, for example facebook, now facebook doesn't create any meme or videos or posts but if there are only two people on it they both will not value facebook that high, but its value will increase as more and more people come in, there will be more meme, more videos and more value a person will derive, same twitter etc.

explosive growth is similar to a meme going viral as more people use it enjoy it exponentially it grows.