TY - JOUR
T1 - Network externalities and technology adoption
T2 - Lessons from electronic payments
AU - Gowrisankaran, Gautam
AU - Stavins, Joanna
PY - 2004
Y1 - 2004
N2 - 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.
AB - 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.
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U2 - 10.2307/1593691
DO - 10.2307/1593691
M3 - Article
AN - SCOPUS:4444296220
SN - 0741-6261
VL - 35
SP - 260
EP - 276
JO - RAND Journal of Economics
JF - RAND Journal of Economics
IS - 2
ER -