2min chapter

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67- If monopolies are so bad why is every company trying to become one?

d.MBA

CHAPTER

What Are Network Effects?

You're trying to reach economies of scale. You want you on a try to be big enough in order for you to have lower cost. Then you want to look for lock in effects. Lockin effects is something easy, like my keyboard on mek works differently than my keyboard on a pc. And that's already a lock in effect, because i'm signing something in a way that is great. But as it is so great, i have ihave a harder choice to go away from it. So all of this in itself, all of these small bits and pieces that in the end lead to a monopoly, if they work out, are completely common pasness practices.

00:00
Speaker 2
You're trying to reach economies of scale. You want you on a try to be big enough in order for you to have lower cost. You are trying to go after a second concept is called economies of scope. So you're looking for other products that you can produce that indirectly help your current product. Like, for example, amazon has a market place, and he amazon has a amazon web services, because it obviously makes sense to host your like, the biggest market place on earth. Also, not at a competitor, but at your place. This is economies of scope. Then you want to look for lock in effects. Lockin effects cannot is not like, it sounds bad, but a lock in effect is something easy, like my keyboard on mek works differently than my keyboard on a pc. And that's already a lock in effect, because i'm signing something in a way that is great. But as it is so great, i have ihave a harder choice to go away from it. Then next one, creating entry barriers also something that i'm trying to do. So i am trying to own the most scarse resources myself, in my company. I want to be dependent. I don't want to be dependent on somebody else. And in the end, network effects, like every company wants to try, or wants to get to a stage that this is a self propelled business matl right? Network effect means that the more people use it, the better it is for everybody. So if you reach a certain state, you will get your customers to do marketing for you, because they benefit from bringing other other people to youra to your business. So if i am now switching to signal, for example, then i want you also to switch the signal, because otherwise i cannot text you. So is the network effact, right? So all of this in itself, all of these small bits and pieces that in the end lead to a monopoly, if they work out, are
Speaker 3
completely common pasness practices.

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