Multiplier Effects in Networks

628
DOI: 10.20542/0131-2227-2017-61-6-77-83
I. Strelets (i_strelets@mail.ru),
MGIMO University, 76, Vernadskogo Prosp., Moscow, 119454, Russian Federation

 

Abstract. Network analysis is nowadays widely used in different sciences, including economic research, due to its methodological possibilities. The growing interest to networks may be explained not only by their theoretical importance but by their practical impact as well. Networks and network products have become an essential part of our life. We all use network goods and services, some of us create and develop networks. Network markets, network economy became meaningful categories both for scientific purposes and in mass media. The growing importance of networks in the modern world makes it necessary to take into consideration not only specific characteristics of network goods and services (network externalities, lock-in effect, etc.), but their possibilities to create multiplier effects. Internal network sales are strictly connected with each other. For instance, the growth of sales of gadgets provokes the growth of the sales of mobile applications. Thus, the fundamentally complementary nature of them influences the mode of their consumption and the scope of sales. It becomes very profitable to organize combined and interconnected sales within the networks. A traditional asymmetric complementarity is when the consumption of a basic product induces the demand for secondary products closely connected with the basic one. Namely, the sales of new types of the hardware (gadgets) intensify the demand for modern mobile applications. Within the networks, complementarity may work in the opposite direction: the appearance of new contents pushes up the sales of more and more state-of-the-art hardware. This means that the firms producing basic products are now directly interested in creating and promoting of contents for their products. Firms may also use the Diderot effect, trying to implement it to the sales of many different goods in the network. Many factors influence multiplier effects, such as the character of the industry, the quantity of goods and services within the network, the character of complementary interdependency, etc. The main task of the firm is to stimulate the consumption of those network goods, which can produce the heaviest multiplier effects. Network multipliers are of great importance for the dynamics of sales of the network goods and services and for competitiveness of the network itself. 

Keywords: networks, network researches, complementarity, network externalities, network multipliers, network competition 


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For citation:
Strelets I. Multiplier Effects in Networks. World Eonomy and International Relations, 2017, vol. 61, no. 6, pp. 77-83. https://doi.org/10.20542/0131-2227-2017-61-6-77-83



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