Network externalities Market structure is also affected by the presence of network externalities Strategic interaction in a market with network effects is complicated These markets are likely to contain a small number of firms even if there are limited economies of scale and scope2 Network Externalities • Market structure is also affected by the presence of network externalities • Strategic interaction in a market with network effects is complicated • These markets are likely to contain a small number of firms – even if there are limited economies of scale and scope