A network effect is observed when

$$ the value of a network increases or decreases with the number of people who use the network, for example a bike part exchange network.

the value of a network increases as more investors join in the financing, for example a new gaming network.

many people choose to use different networks that are competing and driving up the network value, such as dating sites.

more people are choosing to try out various competing networks, such as music sites.

The value of a network $$ as the number of network users rise.