positive feedback

Alternative term for reinforcing feedback.

Network effects exist when the value of a network is roughly proportional to the square of the number of users. Network effects are sometimes also called demand-side economies of scale. Most systems do not display network effects, but for those that do, it is an extremely powerful force. It can set up a positive feedback loop, enabling the leading company to keep leading. By having the largest network it already offers the most value for its users, and where network effects exist users tend to gravitate toward the largest network because they know it will be even bigger in the future. Network effects can sometimes be so powerful that they overwhelm niche ownership.