The Economics of Networks

A common feature of networks is that their value to the user increases with size - network externalities. Metcalfe's law states that the value of a communications network increases as the square of the number of users.

However, these size advantages may only be gained if there are costs to the user in changing from one network to another, that is, if there is some kind of "lock-in".

From > Business 2010: Mapping the New Commercial Landscape