Network Externalities and Technology Adoption: Lessons from Electronic Payments
42 Pages Posted: 17 May 2002 Last revised: 10 Dec 2022
There are 2 versions of this paper
Network Externalities and Technology Adoption: Lessons from Electronic Payments
Date Written: May 2002
Abstract
We seek to analyze the extent and sources of network externalities for the automated clearinghouse (ACH) electronic payments system using a quarterly panel data set on individual bank adoption and usage of ACH. We provide three methods to identify network externalities using this panel data. The first method identifies network externalities from the clustering of ACH adoption. The second method identifies them by examining whether banks in areas with higher market concentration or larger competitors are more likely to adopt ACH. The third method identifies them by examining whether the ACH adoption by small branches of large banks affects the adoption by local competitors. Using fixed effects and panel data 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.
Suggested Citation: Suggested Citation
Do you have negative results from your research you’d like to share?
Recommended Papers
-
Network Externalities and Technology Adoption: Lessons from Electronic Payments
-
Quantifying Equilibrium Network Externalities in the Ach Banking Industry
-
Quantifying Equilibrium Network Externalities in the Ach Banking Industry
-
Identifying Formal and Informal Influence in Technology Adoption with Network Externalities
-
Coordination vs. Differentiation in a Standards War: 56k Modems
By Angelique Augereau, Shane M. Greenstein, ...
-
Heterogeneity and the Dynamics of Technology Adoption
By Stephen Ryan and Catherine E. Tucker
-
Tipping and Concentration in Markets with Indirect Network Effects
By Jean-pierre Dubé, Günter J. Hitsch, ...
-
Privacy Protection and Technology Diffusion: The Case of Electronic Medical Records