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All Signal Inc., a telephone service provider, has a large user base mainly because phone calls and messages between all All Signal users are free. When a person switches to an All Signals network, his or her entire network of family and friends is likely to switch to the same network to receive the benefit of free calls and messages. In addition, an existing user who gets a new user to register with All Signal Inc. is given a free wireless connection. This has helped to keep competition away from All Signal. In this scenario, which of the following factors is acting as an entry barrier for All Signal Inc.?
A. economies of scale.
B. high capital requirement.
C. network effects.
D. high fixed costs.

Respuesta :

Network effects is acting as entry barrier. According to the online course Economics for Managers, refers to any situation in which the value of a product, service, or platform is determined by the number of buyers, sellers, or users who leverage it is called network effects.

Generally, the more buyers, sellers, or users there are, the greater the network effect—and thus the greater the value created by the offering. To ensure that you're pricing your products, services, or platform effectively, you should take several entry barrier into account. You must understand the distinct value your product offers, as well as your customers' willingness to pay.

To learn more about network effect, click here.

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