Network Effects
Definition
A phenomenon where the value of a product or service increases as more people use it. Network effects create powerful competitive moats and are among the most valuable intangible assets, particularly for platform businesses, marketplaces, and social networks.
Related Terms
Related FAQ
What should platform/marketplace companies disclose about network effects?
Marketplace founders often claim strong network effects without evidence. Honest disclosure: measure liquidity, match rates, and growth drivers to prove effects are real.
Read full answer →What is unique about marketplace valuation?
Marketplace valuations depend on network effects, supply/demand balance, take rate (%), and switching cost asymmetry — two-sided platforms are harder to value than single-sided.
Read full answer →What is Viral Coefficient and how is it calculated?
Viral Coefficient is the number of new users each existing user generates through referrals or sharing — values above 1.0 indicate exponential growth potential.
Read full answer →Put this knowledge to work
Use Opagio's free tools to measure and grow the intangible assets that drive your business value.