For a long time, Microsoft has dominated the internet browser market with Internet Explorer. However, this success has come at a price: Internet Explorer became the exclusive target of many malicious attacks taking advantage of various security vulnerabilities. Now, Washinton Post reports, as alternative browsers such as Mozilla Foundation’s Firefox and Apple’s Safari are gaining an increasing market share, they have now become more of a viable target for hackers.

This intrigued me because contrary to most of the network effect scenarios that we have studied in class, it appears that as more users adopt a web browser, the value of a good for the consumer seems to decrease as it becomes the target of an ever growing number of attacks. Indeed, it is ironic to consider that many of Firefox’s early adopters did so to avoid Internet Explorer vulnerabilities. So then, what would differ in a scenario where benefit decreases as the number of users increases?

Its unlikely that a person’s reservation price would increase to infinity as the number of users approached zero, but certainly the benefit of using an uncommon web browser cannot be ignored. In fact, there may not be a stable equilibrium to this scenario when one considers the multiple web browsers available for free these days. After all, security is always a moving target.

http://www.washingtonpost.com/wp-dyn/content/article/2008/04/26/AR2008042600260.html