Network effects and multiple adoption: Two fundamental factors in the competition of e-commerce

The network effect has been a key factor in the competition in the information and telecommunication industries. It is the general principle that the value of connecting to a network depends on the number of existing customers in the network. Usually, it is a positive feedback from consumers, and the self-reinforcement nature of the network effect makes the strong firms stronger and the weak firms weaker. In the case of e-commerce, however, the power of network effects can be mitigated by userspsila multiple adoption of networks, which gives starting firms a chance to compete with strong incumbents. This empirical study showed that, because of multiple adoption, smaller players can still exist in the face of a dominant player.