Today, data networks are also used for transmission of voice (Voice over IP, VoIP). TV and radio networks also have special characteristics, since they usually only allow a one-to-many connection in contrast to telephone and data networks. For more details about network technology. In economic theory, networks (more precisely the service of transmission over a network) are usually considered a homogeneous good, although the ‘quality of service’ of a network can differ regarding speed, reliability, etc. Shy summarizes which characteristics distinguish network markets from ‘the market for grain, dairy products, apples, and treasury bonds’. Complementarity, compatibility and standards: Network hardware (e.g. routers, switches, hubs), software and cables have to be compatible, i.e. rely on common standards. Then they can be considered as complementary goods. Consumption externalities: The utility of a consumer by accessing a network rises when more users use the network. Switching costs and lock-in: When switching costs are high, users do not change the network easily. They are ‘locked-in’. Significant economies of scale: Marginal costs get lower and average costs decline when more users access the network.
Digitalization and Expansion of Human Connectivity
