Network Effect
A product gets more valuable to each user as more people use it. Value comes from the crowd, not the feature list.
Full definition of Network Effect →:: COMPARE ::
Network effectvsEconomic moat
The short answer
The network effect is ONE of five named moat types, not a synonym for moat. Cost advantage, switching costs, intangible assets and efficient scale do the same defensive job with no network at all.
Side by side
| Aspect | Network effect | Economic moat |
|---|---|---|
| Is a | Mechanism | Category |
| Requires users | Yes | No |
| Count | One of five | Five types |
| Named | 1908 / 1993 | 1990s |
What each one means
Economic Moat
A structural competitive advantage that keeps rivals out — the durable thing that lets a business stay profitable after competitors notice it is profitable.
Full definition of Economic Moat →