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Network Effects On Cash‐Card Substitution in Transactions and Low Interest Rate Regimes

Markose, Sheri M and Loke, Yiing Jia (2003) 'Network Effects On Cash‐Card Substitution in Transactions and Low Interest Rate Regimes.' The Economic Journal, 113 (487). pp. 456-476. ISSN 0013-0133

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Abstract

We develop a Nash game on the adoption of a new EFTPOS (Electronic Fund Transfer at Point of Sale) card payment media given cash is dispensed by a competitive ATM (Automated Teller Machine) network. Equilibrium conditions when cash and card use coexist entail a specific relationship between the card network coverage parameter (πk) and the proportion (ω) of cash financed expenditures. We derive a payments innovation technology constrained transactions demand for money which is highly interest rate sensitive in low interest rate regimes. Data on cash-card use in the UK (1990-97) is used to calibrate the model.

Item Type: Article
Subjects: H Social Sciences > HB Economic Theory
Divisions: Faculty of Social Sciences
Faculty of Social Sciences > Economics, Department of
SWORD Depositor: Elements
Depositing User: Elements
Date Deposited: 16 Aug 2012 13:52
Last Modified: 18 Aug 2022 10:41
URI: http://repository.essex.ac.uk/id/eprint/3733

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