Worldwide auction leader eBay started operations in Japan just five months after Yahoo! launched its Japanese auction service. But eBay was never able to mount a credible threat and ended up pulling out of the market. This example shows that

Question

BlackTom AI · Accepted Answer

In markets with strong network effects, being first often builds the critical mass that creates a self-reinforcing advantage, so moving first is decisive. Network effects mean each additional user increases the platform’s value to all other users (buyers want more sellers and vice versa), creating positive feedback, lock-in, and path dependence.

Relevant concepts:
- Network effects (direct and indirect): value grows with user base.
- Critical mass: a platform must reach sufficient users so marginal users derive higher utility than alternatives.
- First-mover advantage and incumbency: the first successful entrant can capture users, data, and complementary offerings, raising switching costs.
- Localized network externalities: a global brand’s dominance doesn’t automatically translate if local networks and user bases are already established.

Step-by-step reasoning:
1. Yahoo! launched its Japanese auction service and attracted initial buyers and sellers, quickly increasing platform value via network effects.
2. Within five months Yahoo! could achieve a user base large enough that each new user experienced higher utility on Yahoo! than on any new entrant.
3. eBay entered later; despite global reputation, it began with far fewer Japanese users, so its perceived utility was lower. This made it harder to attract sellers and buyers away from Yahoo!, reinforcing Yahoo!’s lead.
4. Because users face switching costs (time, listings, reputation), the small advantage in users becomes self-reinforcing, preventing eBay from mounting a credible threat.
5. Thus the critical strategic lesson is the need to move fast to establish the network and reach critical mass in markets where network effects operate.

Why other options are incorrect:
- “Constant shifts in dominance” contradicts lock-in caused by network effects; markets can be stable once a leader locks in users.
- “Global dominance translates to national markets” is false here—global reputation didn’t overcome a locally entrenched network.
- “National markets influenced by non-local factors” is vague and not the central point; local network size mattered.
- “Firms should always subsidize initial adoption” can be a tactic, but it’s not the general lesson demonstrated.

Therefore, the correct conclusion is: it’s imperative to move first in markets influenced by network effects. This matches the provided answer.

Worldwide auction leader eBay started operations in Japan just five months after Yahoo! launched its Japanese auction service. But eBay was never able to mount a credible threat and ended up pulling out of the market. This example shows that单项选择题

类似问题

The term ________ refer(s) to the advantages conferred as an auction site becomes larger in terms of visitors and products for sale.

_____________ occur(s) when increasing number of users lower the value of a product or service.

High switching costs serve to weaken the value of network effects as a value asset.

In a market influenced by network effects, the winning product or service is often determined by its technical superiority, with technically strong newcomers able to unseat the dominant incumbents.

Almost all networks derive most of their value from a single class of users.

In the absence of network effects, the value of a product or service increases as the number of users grows.

Many firms attempt to enhance their network effects by creating a platform for the development of third-party products and services that enhance the primary offering.

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