In the use of electronic payment technology, there is strategic complementarity and hence room for self-fulfilling multiple equilibria. But existing relevant literature is silent about how agents’ expectations become coordinated. This paper resolves the coordination problem in the use of a non-deferred electronic means of payment, which can be represented by a debit card. We focus on that because it is almost a perfect substitute for cash. The presence of exogenous shocks that have a fundamental impact on the cost of the technology makes agents coordinate their expectations in a particular way. We also show that a high inflation and a distortionary financing scheme for debit-card transactions cost disturb coordination in the use of debit cards.
|Number of pages||20|
|Journal||Korean Economic Review|
|Publication status||Published - 2015 Jun 1|
- Electronic payment
- Strategic complementarities
ASJC Scopus subject areas
- Economics, Econometrics and Finance(all)