Microsoft Excel dominates the market for spreadsheets. Many economists believe that its dominance is due to network externalities. Which of the following captures the network-externality story?

Although it is an expensive spreadsheet, it dominates because it is by far the best spreadsheet.
Build a better mousetrap and the world beats a path to your door. Excel is the better mousetrap.
Excel has become the standard in business, and hence it is convenient to use it because that is what everyone else is using.
Excel sells because it priced below other spreadsheet programs, and Microsoft can sell it at a low price because it sells so many copies.

If you are developing a product that has network externalities and those externalities lead to network economies, it is probably very important to:

get big first.
be innovative.
have a product that enhances status.
have a product that is nonexcludable.

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