With the advancement of technology and the emergence of a networked society, economic agents within a region benefit not only from local interactions but also from external economies. However, strengthening extraregional ties may negatively affect regions near the center if their economic resources are absorbed by the core. For regional economic agents, it remains unclear whether negative network externalities outweigh positive ones, and this issue has not been fully addressed in previous studies. To advance understanding in this area, this chapter examines the impact of network externalities on productivity and productive efficiency using stochastic frontier analysis. The results indicate that the Borrowed Size effect of agglomeration in the manufacturing sector significantly increases total factor productivity by shifting the production frontier. Moreover, the shadow effect of agglomeration does not adversely affect productive efficiency in either the manufacturing or nonmanufacturing sector. These findings suggest that enhancing the quality of transportation infrastructure and improving interregional transportation networks can improve the production performance of regional industries.