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Superior Customer Value and Network size in Markets Characterized by Network effects
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Author(s): Fan-Chen Tseng (Kainan University, Taiwan), Ching-I Teng (Chang Gung University, Taiwan)and David Chiang (National Taiwan University, Taiwan)
Copyright: 2008
Pages: 14
Source title:
E-Business Models, Services and Communications
Source Author(s)/Editor(s): In Lee (Western Illinois University, USA)
DOI: 10.4018/978-1-59904-831-4.ch004
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Abstract
Network effect indicates that the value of connecting to a network is positively associated with the current number of customers connected to that network. Network effect strengthens the strong firms, weakens the weak firms, and may lead to a winner-take-all market. Thus, managing customer perceived value is crucial in markets with network effects. This article models customer perceived value, presents ways to improve the value, and discusses the relationship between customer perceived value and network size. Implications for e-business practitioners are discussed.
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