The Interac Association was established in Canada in 1984 to provide consumers with exclusive access to member banks' automatic tellers and electronic payment systems. Debit cards such as the Interac card provide the consumer with convenience, increased financial control and safety.

The Interac Association has been extremely successful. By the end of 1994, Canada's 30 million citizens had in their possession over 23 million ATM/debit cards. The total direct payments made in Canada using debit cards exceeded $1.2 billion in the month of December 1994.

Since Interac is owned by the 9 chartered banks in Canada, there are no hold-up problems (except perhaps those by real bandits.) Buyers and supplier have very little or no power over the venture.

AT&T was incorporated in 1885. The company was formed to capitalize on the invention of the telephone by Alexander Graham Bell in 1876. As the parent company of the former Bell System, AT&T's primary mission was to provide universal telephone service.

AT&T was so successful in accomplishing its mission of universal service, that in 1983 the U.S. anti-trust regulators forced the company's breakup. The Bell System was dissolved at the end of 1983 with AT&T's divestiture of the Bell telephone companies. Today, AT&T operates worldwide in competitive, high-technology markets, with only its long distance services remaining under government regulation.

The example of AT&T shows that even giant venerable corporations face some danger of hold up. Government regulation can magnify the impact of small amounts of small numbers bargaining power of suppliers and buyers.

In March of 1996, AT&T sent a shock wave through the computer on-line services industry. The company announced the launch of a U.S. wide internet access service offered free for the first 12 months to residential customers.

Internet Access Providers such as America Online Inc., PSInet Inc., Netcom Online Communications Inc. and iStar Internet Inc. all felt the impact of this move by AT&T. Stocks in all companies plunged.

The Internet Access Providers should not have been surprised. Their companies were in great danger of hold-up. All these companies rely on telephone companies to provide the lines by which they connect their customers to the internet. As buyers of telephone service, they have very little or no bargaining power with their suppliers. Thus they were waiting victims of hold-up once their market became profitable.