External Benefit of Consumption Pulls Private Demand Farther to the Right Each consumer who joins a network generates an external bene3 t (the vertical distance between the private demand curve, D_P, and the social demand curve, D_S) enjoyed by all other people within the network. This in turn generates even more demand, shifting D_P and D_S farther to the right, to D_P1 and D_S1, respectively. This effect on demand becomes smaller as more people join the network; a smaller effect is due to diminishing returns to the network externality. The same dynamic effect can work in reverse if a consumer chooses to leave the network.