MAKING THE LITTLE GUY PAY: PAYMENTS-SYSTEM NETWORKS, CROSS-SUBSIDIZATION, AND THE COLLAPSE OF THE SUFFOLK SYSTEM
Howard Bodenhorn ()
The Journal of Economic History, 2002, vol. 62, issue 1, 147-169
In the early nineteenth century, the Suffolk Bank established a regional banknote clearing network. Despite the benefits offered, many of the system's member banks were unhappy with it and quickly affiliated with an alternative clearing network as soon as it appeared. The reason for the quick abandonment of the Suffolk system was that it failed to price its network clearing services efficiently. Pressured by large Boston banks to shift the costs of the system to small country banks, the Suffolk engaged in inefficient cross-subsidization. Once a competitor emerged that priced efficiently, it drove the Suffolk from the market.
References: Add references at CitEc
Citations: View citations in EconPapers (6) Track citations by RSS feed
Downloads: (external link)
https://www.cambridge.org/core/product/identifier/ ... type/journal_article link to article abstract page (text/html)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:cup:jechis:v:62:y:2002:i:01:p:147-169_04
Access Statistics for this article
More articles in The Journal of Economic History from Cambridge University Press Cambridge University Press, UPH, Shaftesbury Road, Cambridge CB2 8BS UK.
Bibliographic data for series maintained by Keith Waters ().