Network Externalities: Mom Jeans, Man Buns, and the Snob Effect
Seattle boasts a thriving hipster culture. Its music venues, coffee shops, and small businesses provide alternatives to large-scale corporations. Hipsters generally reject mainstream culture in favor for the “underground”: small, up and coming businesses, musicians, and trends that have yet to gain considerable traction. This behavior is explained by network externalities, or additional effects on the utilities of goods that rely on the number of consumers. Network externalities can be both positive (bandwagon effect) and negative (snob effect). In the bandwagon effect, as the quantity of consumers increases, one’s utility increases. This effect appears when someone wants to fit in Continue reading Network Externalities: Mom Jeans, Man Buns, and the Snob Effect