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Did we read the same article? The author definitely payed much less attention to "network effects" than most articles on this subject usually do, explaining that it is quite common for monopolies to be created for new technologies, as well as giving several other reasons, some of which you reiterated.


It appears to me that he explains the emergence of these monopolies almost exclusively with network effects:

"Internet industries develop pretty much like any other industry that depends on a network: A single firm can dominate the market if the product becomes more valuable to each user as the number of users rises. Such networks have a natural tendency to grow, and that growth leads to dominance."

and

"Still, in a land where at least two mega-colas and two brands of diaper can duke it out indefinitely, why are there so many single-firm information markets? The explanation would seem to lie in the famous American preference for convenience. With networks, size brings convenience."

Did you find any other explanation in the article?


I think this is the meaty quote: "Apart from brief periods of openness created by new inventions or antitrust breakups, every medium, starting with the telegraph, has eventually proved to be a case study in monopoly. In fact, many of those firms are still around, if not quite as powerful as they once were, including AT&T, Paramount and NBC."

Also, your latter quote seems to me to be about size & convenience, not networks. He's using "network" in the sense "on the internet", not in the sense of "network effects". My basic point is that the article has a lot of good things to say, and says relatively little about network effects. So if people read your comment first, they're not going to read the article because they can think "oh yeah network effects, been there done that"


I do agree that the article has other things to say as well. It's not a bad article. But I'm pretty sure that the second quote is supposed to mean that network effects cause larger online services to be more convenient for users. I don't agree with that in general. It's true only in some specific cases where integration of several services makes things more seamless. Your quote doesn't give a reason _why_ monopolies develop. It just states _that_ they do. Also, there is nothing about how they can unravel pretty quickly.




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