What Is the Concept of ‘Diminishing Marginal Utility’ in the Context of Network Growth?

Diminishing marginal utility suggests that as a network grows larger, the addition of each new user provides a smaller increase in overall utility than the previous one. While the network effect is still positive, its rate of growth slows down.

This occurs because the network may become saturated or suffer from congestion, reducing the marginal benefit of adding another user.