Competition Lock-In: How Switching Costs and Network Effects Benefit Big Business
Switching costs and network effects can lock customers into using certain products, making it hard for them to switch to better options. This gives companies power over customers and makes it tough for new companies to enter the market. Companies compete by offering deals and lowering prices to attract customers. In the end, incompatible competition can be more profitable for companies, even if it's not the best for customers. Public policies should encourage compatibility between products to benefit consumers.