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Economic concept
Network effect
A system becomes more useful to each participant as more other participants use it.
All conceptsWhy does the dollar dominate the world?
US economic scale, legal and institutional credibility, open capital markets, and the supply of Treasury securities created a strong foundation. On top of it, a coordination loop developed: firms invoice in dollars because suppliers, customers, banks, and hedging markets already use dollars; that use deepens dollar funding and asset markets, making the next dollar transaction cheaper and safer. The loop is powerful, but it is conditional rather than permanent.
See it at workWhy is oil priced in dollars?
Oil is usually quoted and traded in dollars because the dollar is already the common currency of global trade and finance. Dollar funding, benchmarks, derivatives and liquid assets reinforce that choice. It is a durable convention, not a universal legal rule.
See it at workWhy does a free app often get worse after it becomes dominant?
A free app often subsidizes adoption because users, data and complementary businesses make the network more valuable. After the market tips, the objective can shift from attracting users to monetizing attention, access or business dependence. More ads or friction are not inevitable: a dominant platform still faces regulation, reputation risk, multi-homing and potential technological disruption.