Network effects are particularly important with regards to software, especially operating systems. The more people who use Windows, for example, the more valuable it is to have each copy of windows. When this phenomenum is combined with intellectual property laws, monopolies have a real chance to exist.

Some argue this fact is a compelling reason for government scrutiny of the software industry and Microsoft in particular. I have seen economists concentrate much more on network effects since recent technological advances have made them more common. Indeed, most of the articles I have read in recent months which use the term use it in reference to the software or telecommunications industries.

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