The Impact of the Network Effect on the Competitive Position of the Firms：A Case of Online Auction Web Sites in Taiwan

• Main Authors: Pao-Ching Chiang, 江保慶
• Other Authors: Han-Sheng Lei
• Format: Others
• Language: zh-TW
• Published: 2004
• Online Access: http://ndltd.ncl.edu.tw/handle/69348579040696246053

碩士 === 朝陽科技大學 === 企業管理系碩士班 === 92 === Abstract The traditional economics emphasized the Law of diminishing marginal returns, while the Law of increasing marginal returns dominant the new economy now. In the 1990s, some entrepreneurs who are in the western industrialized countries found the phenomenon of increasing marginal returns. They found that some products which once were leaders in the market will always be the leaders. This ends up the phenomenon of "the big is always the big and the small ones become even smaller". The main reason behind this phenomenon of increasing returns is ‘the network effect’. For the players of the online auction website, the quantity of the goods listed on their website is the key success factor in competing with each others. The one who has more quantity of goods listed on will attract more buyers and sellers to join in for the purpose of finding more opportunity for transact with each other. This phenomenon of positive feedback is exactly the same as the concept of network effect. The purpose of this study is to understand the relationship of the network effect and the competitive position of the auction website in Taiwan. We chose the "Yahoo! Auction in Taiwan "and the "ebay in Taiwan" as our target of research. We proceed an in-depth interviewing with the management of these two online auction websites first, follow by mailing the questionnaire to the members of these websites. We received 642 respondents in return, and according to the result of data analyzing we have the following conclusions. 1. There is impact of the network effect on the competitive position of the online auction websites. 2. There are positive relationship between the amount of specific investment the members incurred and the network effect they perceived. 3. There are positive relationship between the amount of switching cost the members born and the network effect they perceived. 4. The significant events happened in the environment will affect the installed base of each players of the online auction website. Keyword：network effect ; On-line auction；e-commerce