Coordination on use of non-deferred electronic payment instruments

Research output: Contribution to journalArticle

1 Citation (Scopus)

Abstract

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.

Original languageEnglish
Pages (from-to)5-24
Number of pages20
JournalKorean Economic Review
Volume31
Issue number1
Publication statusPublished - 2015 Jun 1

Keywords

  • Cash
  • Coordination
  • Electronic payment
  • Strategic complementarities

ASJC Scopus subject areas

  • Economics, Econometrics and Finance(all)

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