Match each of the terms on the left with its definition on the right. Click on the term first and then click on the matching definition. As you match them correctly they will move to the bottom of the activity.
network physical network virtual network social network network good network externality network effect network demand curve core user casual user tipping point (critical mass) virtuous cycle vicious cycle teaser strategies switching cost lockin strategies market segmentation versioning intertemporal pricing peakload pricing bundling industry standard essential facility interconnection | A consumer who has a very high willingness to pay for a new product or service and is among the first to purchase it A strategy of packaging several products into a single product with a single price. Bundling allows firms to capture customers of related products by making it more attractive to use the same firm’s products A good or service that requires the existence of a physical, virtual, or social network to exist An external benefit generated from the consumption of a network good that is taken into account by individuals and firms in their decision making. It increases the value of a good as more people use or subscribe to a good A network connected by a physical structure such as fiber optics, transportation routes, or satellites Techniques used by firms to raise the switching costs for its customers, making it less attractive to leave the network A structure that connects various entities with one another. A network can be physical, virtual, or social The quantity from which network effects are strong enough to support the network A demand curve for a good or service that experiences a network effect, causing it to slope upward at lower quantities before sloping downward once the market matures The point at which a network good reaches its tipping point, when network effects cause demand for the good to increase on its own. As more people buy or subscribe to a good or service, it generates even more external benefits and more demand Attractive upfront deals used as an incentive to entice new customers into a network A network that combines elements of physical and virtual networks by describing groups of people using the same product or service who also are connected more directly (for business or entertainment purposes) within the network The physical linking of a network to another network’s essential facilities. Interconnection promotes competition by ensuring that no firm has exclusive access to a set of customers A common format that is used, for example, in televisions, in digital recorders, or in software programs When a network good does not reach its tipping point, and therefore does not increase in value enough to retain its customers, customers leave the network, thereby further diminishing the value of the good until all customers leave the network A pricing strategy that involves differentiating a good by way of packaging into multiple products for people with different demands A strategy of making a single good in different versions to target different consumer markets with varying prices An external benefit generated from the consumption of a network good A consumer who purchases a good only after the good has matured in the market and is more sensitive to price A type of versioning in which goods are differentiated by the level of patience of consumers. Less patient consumers pay a higher price than more patient consumers A network connected by groups of people using the same type or brand of good A versioning strategy of pricing a product higher during periods of higher demand, and lower during periods of lower demand An input that is needed to produce a product or to allow a person to consume a product A cost imposed on consumers when they change products or subscribe to a new network |