Author Question: Explain the different sources of negative network externalities.[br][br][b][color=#347235]Question ... (Read 61 times)

hubes95 · **on:** Jun 30, 2018

Explain the different sources of negative network externalities.

Question 2

When are businesses likely to outsource some of their activities?

brittanywood · **Reply #1 on:** Jun 30, 2018

Answer to Question 1

Negative network externalities may be a result of the snob effect. The snob effect is a negative network externality where a consumer wants to own a unique good. Negative network externalities can arise from congestion.

Answer to Question 2

Like decisions to integrate, decisions to outsource also depend on the relative costs and benefits of internal and external activities. Businesses are more likely to outsource when performance is easy to measure, alternative suppliers are available, and contracting is not costly.