On the other hand, it is in general not much more expensive to produce a large number of payments than a small number of payments due to the benefits provided by economies of scale. However, it takes some time before a new system can reap these benefits. The costs for building, manning and maintaining such a technical system are rather high and it is only when the system is in place that costs begin to fall. Then the cost of processing an additional payment is almost zero. The average cost of making a payment thus falls as the number of payments increases. The price per transaction that the producer can charge without running at a loss is therefore low. Already established payment services that handle large volumes of payments therefore have a cost advantage. The larger the volume the established service has, the greater is its advantage. The situation for a new service is exactly the opposite. At least initially, a new service will have a small number of payments to distribute the fixed costs between. In order not to price itself out of the market, the new service will have to run at a loss until it has achieved a sufficiently high volume. A new service thus has a significant cost disadvantage compared with an established service. Second, a new system has to compete against the so-called network effects. The classic example of a network effect is telephony. Being the first person to have a telephone offers no advantages.
In the old days, when the economy was dominated by manufacturing, it might have been relatively easy to measure the volume of output and value added of different industries. But our economy today is dominated by services. Conceptually even defining the value added in, say, the financial sector, let alone measuring it, is not straightforward. Moreover, the meaning of a series often changes subtly over time as the economy evolves. Manufacturing today is a very different animal from manufacturing 30 years ago: for instance, the value added of Rolls-Royce aero engines today comes as much from the after-sales and maintenance as from the engine assembly itself. Finally, and most saliently for real-time policy analysis, the official data invariably appear with a delay of some months and can be substantially revised as more information accrues and the ONS improve their methodology. For that reason, the Monetary Policy Committee supplements the official data with two other sources of information that are more timely, even if they lack precision compared with the official data. The first are the regular business surveys from the likes of the Confederation of British Industry and the British Chambers of Commerce. As many of these have been going for quite a while, we have in many cases been able to establish their usefulness as predictors of the not-yet-available official data. Second, we also rely on the information provided by our network of regional Agents who have about 8000 business contacts across the country.