Network effect refers to a positive amplifying feedback loop created from the exchange of value between connected parties within a network. It means that the more users that sign up and use a network, the more valuable it becomes for others to join, continually reinforcing its utility and creating network externalities. Consequently, the larger and more connected the network, the more valuable it is for its members and the more costly for other networks to rival and compete.

See also: emergence, social network, collective intelligence, game theory