Network externalities and technology adoption: Lessons from electronic payments

Gautam Gowrisankaran, Joanna Stavins

Research output: Contribution to journalArticlepeer-review

123 Scopus citations


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
Issue number2
StatePublished - 2004

ASJC Scopus subject areas

  • Economics and Econometrics


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