Citation
Information Rules: A Strategic Guide to the Network Economy
TL;DR
Network effects create winner-take-all markets
Seminal analysis of network effects, standards battles, and winner-take-all dynamics in digital markets. Provides strategic framework for understanding how network economics create concentration and how organizations can compete.
Remains essential reading for understanding platform competition, lock-in effects, and strategies for both incumbents defending dominant positions and challengers seeking to disrupt them.
Key Findings from Shapiro & Varian (1998)
- Network effects create winner-take-all markets
- Standards battles determine market concentration
- Lock-in effects from installed base and switching costs
- Strategic frameworks for network competition