Bank of Canada Working Paper on E-Commerce, Online Banking

The Bank of Canada has published a working paper titled "Market Structure and the Diffusion of E-Commerce: Evidence from the Retail Banking Industry" by Jason Allen, Robert Clark, and Jean-Francois Houde.

This paper studies the role that market structure plays in affecting the diffusion of electronic banking. Electronic banking (and electronic commerce more generally) reduces the cost of performing many types of transactions for firms. The full benefits for firms from adoption, however, only accrue once consumers begin to perform a significant share of their transactions online. Since there are learning costs to adopting the new technology firms may try to encourage consumers to go online by affecting the relative quality of the online and offline options. Their ability to do so is a function of market structure.