According to Network Effect literature network externalities lead to market failure due to Pareto-inferior coordination results. We show that the assumptions and simplifications implicitly used for modeling standardization processes fail to explain the real-world variety of diffusion courses in today’s dynamic IT markets and derive requirements for a more general model of network effects. We argue that Agent-based Computational Economics provides a solid basis for meeting these requirements by integrating evolutionary models from Game Theory and Institutional Economics.
Weitzel, Tim; Wendt, Oliver; and Westarp, Falk V., "Reconsidering Network Effect Theory" (2000). ECIS 2000 Proceedings. 91.