Network externalities and technology adoption: lessons from electronic payments

Gautam Gowrisankaran and Joanna Stavins

No 99-5, Working Papers from Federal Reserve Bank of Boston

Abstract: We seek to determine the presence and causes of network externalities for the automated clearinghouse (ACH) electronic payments system, using a monthly panel data set on individual bank adoption of ACH. We construct a model of ACH usage that shows how to separately identify network externalities from technological advancement and peer-group effects. We find significant evidence of network effects and find evidence that these network effects are not internalized. Moreover, a large part of these network effects is due to informational problems. Sunk costs of adoption appear to be low.

Keywords: Clearinghouses (Banking); Electronic funds transfers; Technology (search for similar items in EconPapers)
Date: 1999
New Economics Papers: this item is included in nep-ind, nep-ino and nep-net
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Citations: View citations in EconPapers (11)

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Related works:
Journal Article: Network Externalities and Technology Adoption: Lessons from Electronic Payments (2004)
Working Paper: Network externalities and technology adoption: lessons from electronic payments (2002)
Working Paper: Network Externalities and Technology Adoption: Lessons from Electronic Payments (2002)
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