1. Announcements
Evaluations
Experiment

2. Network Externalities
Definition: A network externality exists when the utility that a user derives from consumption of the good increases with the number of other users consuming the good.

3. Direct vs. Indirect
Direct effect – The number of users directly affects the quality / usefulness of the product. E.g., phone, word processors, eBay auctions
Indirect effects – The amount and variety of complementary goods and services is a function of the number of direct users. E.g., Xbox/Sega game consoles, DVD players, possibly cell phone service

4. Can an inferior version beat a superior one?
Beta vs. VHS
IBM vs. Apple
MS Word vs. Word Perfect
Excel and Lotus 123
Netscape and Explorer