Strategic Complementarities in a Dynamic Model of Technology Adoption: P2P Digital Payments

Fernando Álvarez (), David Argente, Francesco Lippi (), Esteban Méndez-Chacón () and Diana Van Patten ()
Additional contact information
Fernando Álvarez: University of Chicago
Francesco Lippi: Pennsylvania State University
Esteban Méndez-Chacón: Department of Economic Research, Central Bank of Costa Rica
Diana Van Patten: Yale University and NBER

No 2307, Documentos de Trabajo from Banco Central de Costa Rica

Abstract: This paper develops a dynamic model of technology adoption featuring strategic complementarities: the benefits of usage increase with the number of adopters. We study the diffusion of new means of payments, where such complementarities are pervasive. We show that complementarities give rise to multiple equilibria, suboptimal allocations, and study the planner’s problem. The model generates gradualism in adoption, as individuals optimally wait for others to adopt before doing so. We apply the theory to the adoption of SINPE, an electronic peer-to- peer (P2P) payment app developed by the Central Bank of Costa Rica. Transaction-level data on the use of SINPE and several administrative data sets on the network structure allow us to exploit plausibly exogenous variation and to document sizable complementarities. A calibrated version of the model shows that the optimal subsidy pushes the economy to universal adoption. ***Resumen: Este documento desarrolla un modelo dinámico de adopción de tecnología que presenta complementariedades estratégicas: los beneficios del uso aumentan con el número de adoptantes. Estudiamos la difusión de nuevos medios de pago, donde tales complementariedades son generalizadas. Mostramos que las complementariedades dan lugar a equilibrios múltiples, asignaciones subóptimas y estudiamos el problema del planificador. El modelo genera gradualismo en la adopción, ya que los individuos esperan óptimamente a que otros adopten antes de hacerlo. Aplicamos la teoría a la adopción de SINPE Móvil, una plataforma de pago electrónico entre pares (P2P) desarrollada por el Banco Central de Costa Rica. Datos sobre la estructura de la red nos permiten explotar una variación exógena plausible y documentar complementariedades considerables. Una versión calibrada del modelo muestra que el subsidio óptimo empuja a la economía a la adopción universal.

Keywords: Technology Adoption; Network Externalities; Means of Payment; Adopción tecnológica; Externalidades de red; Medios de pago (search for similar items in EconPapers)
JEL-codes: E4 E5 O1 O2 (search for similar items in EconPapers)
Pages: 130 pages
Date: 2023-05
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Related works:
Working Paper: Strategic Complementarities in a Dynamic Model of Technology Adoption: P2P Digital Payments (2023)
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Persistent link: https://EconPapers.repec.org/RePEc:apk:doctra:2307

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