Although all goods have the general purpose of satisfying people's wants and needs, specific types of goods occupy specialized places within the market and have various components unique. Network assets are one of them. The value of a network good increases when more consumers buy and use it. This is evident when we consider the definition of network, namely that it is a system of connection. The network effect is what creates the network aspects of a good. The network effect refers to the fact that the more people use something, the more valuable it is. There are four main types of network effects: direct, indirect, bilateral and local. The direct network effect is simply defined as increased usage means increased value. Indirect network effects refer to complementary goods, stating that increased use of a good leads to increased production and sales of its complements. An example of this would be a Windows personal computer which indirectly stimulates the creation and demand for computer security systems such as Norton. Additionally, in many cases the price of complementary goods also decreases in these situations. Two-way network effects refer to an increase in the use of a network good and, therefore, an increase in sales of a similar substitute product. Finally, local network effects show that when a good is used by a local group of individuals rather than the general customer base, sales and usage increase. Overall, network goods theory is relatively new because it applies to technological advancements and businesses more than any other market. Network goods are typically sold by monopolies or by the controller of a specific market. The reason is that new businesses in a specific network sector struggle because they start with no network at all. This is a...... middle of paper ...... the best example of these goods would be the telephone, however, many goods would since be classified as network goods as they experience network effects within of the market. In these situations, the value of goods and services increases as more people use them. In the technological age, these networks are everywhere. However, the network effect and its model have as many negative as positive implications. As with any theory or effect in economics, one must be careful not to let models and ideas lead them to conclusions. All markets, businesses and connections are different. However, the similarities between elements subject to the network effect are quite obvious. The most important distinction to remember is the difference between network effects and network externalities. Many factors limit network assets and their market position..