Network externalities and technology adoption: Lessons from electronic payments

Gautam Gowrisankaran, Joanna Stavins

Research output: Contribution to journalArticle

101 Citations (Scopus)

Abstract

We analyze the extent of network externalities for the automated clearinghouse (ACH) electronic payments system using a panel dataset on bank adoption and usage of ACH. We develop three methods. The first examines the clustering of ACH adoption. The second examines the impact of market concentration and the size of competitors on ACH adoption. The third examines the impact of ACH adoption by small branches of large banks on local competitors. These methods separately identify network externalities from technological advancement, peer-group effects, economies of scale, and market power. We find evidence that the network externalities are moderately large.

Original languageEnglish (US)
Pages (from-to)260-276
Number of pages17
JournalRAND Journal of Economics
Volume35
Issue number2
StatePublished - Jun 2004
Externally publishedYes

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Technology adoption
Network externalities
Clearinghouse
Electronic payment
Competitors
Peer group effects
Electronic payment system
Market power
Clustering
Economies of scale
Market concentration

ASJC Scopus subject areas

  • Economics and Econometrics

Cite this

Network externalities and technology adoption : Lessons from electronic payments. / Gowrisankaran, Gautam; Stavins, Joanna.

In: RAND Journal of Economics, Vol. 35, No. 2, 06.2004, p. 260-276.

Research output: Contribution to journalArticle

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