L2 - Firm Objectives, Organization, and Behavior

• Technology Adoption in Input-Output Networks

  Staff Working Paper 2019-51 Xintong Han, Lei Xu

  We study how input-output networks affect the speed of technology adoption. In particular, we model the decision to adopt the programming language Python 3 by software packages. Python 3 provides advanced features but is not backward compatible with Python 2, which implies it comes with adoption costs.

  Content Type(s): Staff research, Staff working papers Topic(s): Economic models, Firm dynamics, Productivity JEL Code(s): C, C6, C61, L, L2, L23, L8, L86, O, O1, O14, O3, O33

• 2018 Merchant Acceptance Survey

  Staff Analytical Note 2019-31 Kim Huynh, Gradon Nicholls, Mitchell Nicholson

  In 2015, the Bank of Canada surveyed merchants and found that cash was nearly universally accepted (Fung, Huynh and Kosse 2017). Since 2015, retail payments in Canada have become increasingly digitalized, as many Canadians have adopted digital payment innovations like contactless cards and Interac e-Transfer.

  Content Type(s): Staff research, Staff analytical notes Topic(s): Bank notes, Digital currencies and fintech, Econometric and statistical methods JEL Code(s): C, C8, D, D2, D22, E, E4, L, L2
• November 16, 2017

  Acceptance and Use of Payments at the Point of Sale in Canada

  Bank of Canada Review - Autumn 2017 Ben Fung, Kim Huynh, Anneke Kosse

  Merchants universally accept cash. Consumers widely hold cash but also carry debit and credit cards. The cost of using a method of payment has only a small influence on which method consumers use. Large merchants accept all payments, while only two-thirds of small and medium-sized businesses accept credit cards. Merchants report that credit cards are the costliest payment method compared with cash and debit cards. However, costs are not the only consideration. Merchant acceptance of credit accounts for the many con-sumers that want to use credit cards. This interaction between consumers and merchants is known as network externalities.

  Content Type(s): Publications, Bank of Canada Review articles Topic(s): Bank notes, Digital currencies and fintech, Financial institutions, Payment clearing and settlement systems JEL Code(s): D, D2, D23, D24, E, E4, E41, E42, G, G2, G21, L, L2

• The Costs of Point-of-Sale Payments in Canada

  Staff Discussion Paper 2017-4 Anneke Kosse, Heng Chen, Marie-Hélène Felt, Valéry Dongmo Jiongo, Kerry Nield, Angelika Welte

  Using data from our 2014 cost-of-payments survey, we calculate resource costs for cash, debit cards and credit cards. For each payment method, we examine the total cost incurred by consumers, retailers, financial institutions and infrastructures, the Royal Canadian Mint and the Bank of Canada.

  Content Type(s): Staff research, Staff discussion papers Topic(s): Bank notes, Digital currencies and fintech, Financial institutions, Payment clearing and settlement systems JEL Code(s): D, D1, D12, D2, D23, D24, E, E4, E41, E42, G, G2, G21, L, L2

• Financial Constraint and Productivity: Evidence from Canadian SMEs

  Staff Working Paper 2016-44 Shutao Cao, Danny Leung

  The degree to which financial constraint is binding is often not directly observable in commonly used business data sets (e.g., Compustat). In this paper, we measure and estimate the likelihood of a firm being constrained by external financing using a data set of small- and medium-sized Canadian firms.

  Content Type(s): Staff research, Staff working papers Topic(s): Firm dynamics, Productivity JEL Code(s): D, D2, D24, G, G3, G32, L, L2, L25
• November 13, 2014

  Firm Strategy, Competitiveness and Productivity: The Case for Canada

  Bank of Canada Review - Autumn 2014 Lori Rennison, Farid Novin, Matthieu Verstraete

  At a time when the Bank is expecting a rotation of demand toward exports and investment, and transformative global trends are placing increasing emphasis on innovation, technology and organizational learning, an understanding of the competitiveness strategies of Canadian firms and the factors affecting them has become particularly relevant. This article summarizes findings from a Bank of Canada survey of 151 firms designed to extract signals on elements of firm strategy and organizational capital in order to help inform the macroeconomic outlook.

  Content Type(s): Publications, Bank of Canada Review articles Topic(s): Business fluctuations and cycles, Monetary policy and uncertainty, Potential output, Productivity JEL Code(s): D, D2, D23, D24, E, E2, E22, F, F2, F20, L, L1, L10, L2, L20, M, M1, M10, O, O3, O31, O4, O47

• On the Importance of Sales for Aggregate Price Flexibility

  Staff Working Paper 2014-45 Oleksiy Kryvtsov, Nicolas Vincent

  Macroeconomists have traditionally ignored the behavior of temporary price markdowns (“sales”) by retailers. Although sales are common in the micro price data, they are assumed to be unrelated to macroeconomic phenomena and generally filtered out.

  Content Type(s): Staff research, Staff working papers Topic(s): Business fluctuations and cycles, Economic models, Inflation and prices, Market structure and pricing, Monetary policy transmission JEL Code(s): E, E3, E31, E32, E5, E52, L, L1, L11, L2, L25, L8, L81, M, M3, M31

• Uncertain Costs and Vertical Differentiation in an Insurance Duopoly

  Staff Working Paper 2014-14 Radoslav Raykov

  Classical oligopoly models predict that firms differentiate vertically as a way of softening price competition, but some metrics suggest very little quality differentiation in the U.S. auto insurance market.

  Content Type(s): Staff research, Staff working papers Topic(s): Economic models, Market structure and pricing JEL Code(s): D, D4, D43, D8, D81, G, G2, G22, L, L2, L22

• Price Negotiation in Differentiated Products Markets: Evidence from the Canadian Mortgage Market

  Staff Working Paper 2012-30 Jason Allen, Robert Clark, Jean-François Houde

  This paper measures market power in a decentralized market where contracts are determined through a search and negotiation process. The mortgage industry has many institutional features which suggest competitiveness: homogeneous contracts, negotiable rates, and, for a given consumer, common lending costs across lenders.

  Content Type(s): Staff research, Staff working papers Topic(s): Financial institutions, Financial services, Market structure and pricing JEL Code(s): D, D4, G, G2, G21, L, L2, L22

• The Role of Convenience and Risk in Consumers' Means of Payment

  Staff Discussion Paper 2009-8 Carlos Arango, Varya Taylor

  Using data from a 2004 survey of the Canadian public, the authors study the role of convenience and risk in consumers' use of cash relative to debit and credit cards. The authors find that consumers who perceive debit cards and credit cards to be more convenient and less risky than cash use them more frequently.

  Content Type(s): Staff research, Staff discussion papers Topic(s): Bank notes JEL Code(s): E, E4, E41, L, L2