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 (or critical mass) virtuous cycle vicious cycle teaser strategies switching cost lock- market segmentation versioning intertemporal pricing peak- bundling industry standard essential facility interconnection | 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 versioning strategy of pricing a product higher during periods of higher demand, and lower during periods of lower demand. 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. Describes how individuals and firms incorporate the external benefit generated from network goods into their decision making, which increases the value of the good further. A consumer who purchases a good only after the good has matured in the market and is more sensitive to price. A network that combines elements of physical and virtual networks. An external benefit generated from the consumption of a network good. A demand curve for a good or service that produces a network effect, causing it to slope upward at lower quantities before sloping downward once the market matures. An input that is needed to produce a product or to allow a person to consume a product. A good or service that requires the existence of a physical, virtual, or social network to exist. The quantity from which network effects are strong enough to support the network. 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 common format that is used, for example, in televisions, in digital recorders, or in software programs. 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 structure that connects various entities with one another. A network can be physical, virtual, or social. A strategy of making a single good in different versions to target different consumer markets with varying prices. Attractive up- A cost imposed on consumers when they change products or subscribe to a new network. A pricing strategy that involves differentiating a good by way of packaging into multiple products for people with different demands. 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 network connected by a physical structure such as fiber optics, transportation routes, or satellites. 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. Techniques used by firms to raise the switching costs for their customers, making it less attractive to leave the network. A network connected by groups of people using the same type or brand of good. |