Network Effects

A network effect is the phenomenon by which the value or utility a user derives from a good or service depends on the number of users of compatible products.

• Same-Side Network Effects: an increase in the number of users increases the value of the product. (Imagine phones, more people who use it, the more valuable it is)
• Cross-Side Network Effects: the value of a product or service increases due to the complementary products or services. (Imagine video game consoles, more games available makes the console more valuable)

source: Session 3 - Google Car