Externality of network economy and its influence

First, from the consumption level of market players: when the value of a product to users increases with the increase of users using the same product or compatible products, network externalities appear;

Second, the value gained by network users:

1. Self-value: the value of the product itself without other users;

2. Collaborative value: the added value gained by old users when new users join the network;

The influence of externalities:

1, negative impact on the whole economy:

Both positive externalities and negative externalities destroy the due efficiency of the market, reduce the total social utility and distort the cost-effectiveness.