Economics Externalities Questions
A network externality refers to the positive or negative impact that an individual's consumption or use of a product or service has on the utility or value of that product or service for others. It occurs when the value of a good or service increases as more people use it. For example, the value of a social media platform increases as more users join, as it allows for more connections and interactions.
On the other hand, a public good is a good or service that is non-excludable and non-rivalrous in consumption. Non-excludable means that it is impossible to prevent individuals from benefiting from the good or service, even if they do not contribute to its provision. Non-rivalrous means that one person's consumption of the good or service does not diminish its availability for others. Examples of public goods include national defense, street lighting, and public parks.
In summary, the main difference between a network externality and a public good is that a network externality refers to the impact of consumption on the value of a good or service for others, while a public good refers to the characteristics of a good or service that make it non-excludable and non-rivalrous.