Economics Externalities Questions
A network externality refers to the impact that an individual's consumption or use of a good or service has on the utility or value of that good or service for others. It occurs when the value of a product increases as more people use or adopt it. Examples include social media platforms, where the more users there are, the more valuable the platform becomes for each user.
On the other hand, a private good is a type of good that is both excludable and rivalrous in consumption. Excludability means that individuals can be prevented from using or consuming the good if they do not pay for it, while rivalry means that one person's consumption of the good reduces the amount available for others. Examples of private goods include food, clothing, and personal electronics.
In summary, the main difference between a network externality and a private good is that a network externality refers to the impact of consumption on others' utility, while a private good refers to the characteristics of a good itself, such as excludability and rivalry.