Question 8What are DIRECT network effects? 1 pointThis is also called same-side network effect and arise where the presence of an additional customer on one side of the market affects the value to users on the same side of the market. An example is online gamers who benefit from participation of other gamers.Network effect that arises where an additional participation on one-side of the market affects the value to users on the other side of the market. For instance, more merchants accepting Amex increases the value for Amex card holders.
Question
Question 8What are DIRECT network effects? 1 pointThis is also called same-side network effect and arise where the presence of an additional customer on one side of the market affects the value to users on the same side of the market. An example is online gamers who benefit from participation of other gamers.Network effect that arises where an additional participation on one-side of the market affects the value to users on the other side of the market. For instance, more merchants accepting Amex increases the value for Amex card holders.
Solution
The text you provided is in English, so I will continue in English.
Direct network effects, also known as same-side network effects, occur when the value of a product or service increases for both new and existing users as more people use it. This is often seen in social networks or communication platforms. For example, the more people who use a social media platform, the more valuable it becomes to each user because there are more people to connect with.
In contrast, indirect network effects, also known as cross-side network effects, occur when the increase in usage of a product or service on one side of a market increases the value of a complementary product or service on the other side of the market. For example, as more people use credit cards like Amex, more merchants are incentivized to accept Amex as a form of payment, which in turn increases the value of owning an Amex card for consumers.
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