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Shocks and Technology Adoption: Evidence from Electronic Payment Systems

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  • Nicolas Crouzet
  • Apoorv Gupta
  • Filippo Mezzanotti

Abstract

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.

Suggested Citation

  • Nicolas Crouzet & Apoorv Gupta & Filippo Mezzanotti, 2023. "Shocks and Technology Adoption: Evidence from Electronic Payment Systems," Journal of Political Economy, University of Chicago Press, vol. 131(11), pages 3003-3065.
    • Handle: RePEc:ucp:jpolec:doi:10.1086/724847
    DOI: 10.1086/724847
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    Cited by:

    1. Francisco J. Buera & Nicholas Trachter, 2024. "Sectoral Development Multipliers," Working Paper 24-02, Federal Reserve Bank of Richmond.

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