There has been a quiet revolution in the economics of products & technology. One is well know and much heralded. It is commonly referred to as network effects. The other is less well known, but equally powerful. I use the term ‘marginal runaway’ to describe it.

Network effects occur when each additional user (or consumer) of a good or service has a positive effect on the value of that product to others. In essence this is an economic externality. The user or the provider cannot capture this incremental value per transaction, but if the externality can be internalised into a group, then this can dramatically increase the value of the group. …










About

Gary Aitchison

Serial entrepreneur, Engineer & Economist, citizen of world. BSc, BEng & MTCP Sydney University, MSc Economics London School of Economics & Political Science.

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