Estimating Potential Network Size in Markets Characterized by Three Types of Network Effect
繁鎮 曾, 景宜 鄧
Abstract
Few past studies have guided firms to estimate the potential size of a market with network effects; and in this context no study has used various types of network effects for market-size estimation. This paper proposes a model for estimating the potential network size in markets characterized by three types of network effects -- accelerating, stable, and decelerating -- in three types of markets: receptive, stable, and resistive. This study found that (1) receptive and stable markets with accelerating network effect will have a very large network size; (2) receptive markets with stable network effect will also have a very large network size; (3) stable and resistive markets with decelerating network effect will have a constrained network size; and (4) resistive markets with stable network effect will also have a constrained network size.