MAKING THE LITTLE GUY PAY: PAYMENTS-SYSTEM NETWORKS, CROSS-SUBSIDIZATION, AND THE COLLAPSE OF THE SUFFOLK SYSTEM

B-Tier
Journal: Journal of Economic History
Year: 2002
Volume: 62
Issue: 1
Pages: 147-169

Score contribution per author:

2.011 = (α=2.01 / 1 authors) × 1.0x B-tier

α: calibrated so average coauthorship-adjusted count equals average raw count

Abstract

In the early nineteenth century, the Suffolk Bank established a regional banknote clearing network. Despite the benefits offered, many of the system's member banks were unhappy with it and quickly affiliated with an alternative clearing network as soon as it appeared. The reason for the quick abandonment of the Suffolk system was that it failed to price its network clearing services efficiently. Pressured by large Boston banks to shift the costs of the system to small country banks, the Suffolk engaged in inefficient cross-subsidization. Once a competitor emerged that priced efficiently, it drove the Suffolk from the market.

Technical Details

RePEc Handle
repec:cup:jechis:v:62:y:2002:i:01:p:147-169_04
Journal Field
Economic History
Author Count
1
Added to Database
2026-01-24