Shocks and Technology Adoption: Evidence from Electronic Payment Systems

We provide evidence on the importance of coordination frictions in technology adoption, using data from a large provider of electronic wallets during the Indian demonetization. Exploiting geographical variation in exposure to the demonetization, we show that adoption of the wallet increased persiste...

Full description

Saved in:
Bibliographic Details
Published in:The Journal of political economy 2023-11, Vol.131 (11), p.3003-3065
Main Authors: Crouzet, Nicolas, Gupta, Apoorv, Mezzanotti, Filippo
Format: Article
Language:English
Subjects:
Coordination
Economic theory
Intervention
Political economy
Technology
Technology adoption
Citations: Items that this one cites
Items that cite this one
Online Access:Get full text
Tags: Add Tag
No Tags, Be the first to tag this record!
Description
Summary:We provide evidence on the importance of coordination frictions in technology adoption, using data from a large provider of electronic wallets during the Indian demonetization. Exploiting geographical variation in exposure to the demonetization, we show that adoption of the wallet increased persistently in response to the large but temporary cash contraction, consistent with the predictions of a technology adoption model with complementarities. Model estimates indicate that adoption would have been 45% lower without complementarities. Our results illustrate how large but temporary interventions can help overcome coordination frictions, though we caution that such interventions may also exacerbate initial differences in adoption.
ISSN:0022-3808
1537-534X
DOI:10.1086/724847