Positive feedback in network economic system

  • Authors:

  • Lifang Zhang

  • Affiliations:

  • Department of Public Finance, Xiamen University, Xiamen, Fujian

  • Venue:
  • CCDC'09 Proceedings of the 21st annual international conference on Chinese control and decision conference
  • Year:
  • 2009

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Abstract

As the economic system gets more interconnected and complex, the conventional economics based on diminishing returns and negative feedbacks are facing tremendous challenges. Multiple-equilibria, lock-in and inefficient path dependence are often witnessed. This paper aims to study the network economic system with non-linear positive feedback from theory to application. Starting from the concept of networks and network effects, it extends to the causes and consequences of positive feedback in network economy and the market structure transformation in specific. With the global web server market as an empirical example, we also prove the existence of positive feedbacks in reality.