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Strategic incompatibility in ATM markets

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  • Knittel, Christopher R.
  • Stango, Victor

Abstract

We test whether firms use incompatibility strategically, using data from ATM markets. High ATM fees degrade the value of competitors' deposit accounts, and can in principle serve as a mechanism for siphoning depositors away from competitors or for creating deposit account differentiation. Our empirical framework can empirically distinguish surcharging motivated by this strategic concern from surcharging that simply maximizes ATM profit considered as a stand-alone operation. The results are consistent with such behavior by large banks, but not by small banks. For large banks, the effect of incompatibility seems to operate through higher deposit account fees rather than increased deposit account base.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Banking & Finance.

Volume (Year): 35 (2011)
Issue (Month): 10 (October)
Pages: 2627-2636

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Handle: RePEc:eee:jbfina:v:35:y:2011:i:10:p:2627-2636

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Web page: http://www.elsevier.com/locate/jbf

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Keywords: ATMs Incompatibility Network economics;

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References

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Cited by:
  1. Donze, Jocelyn & Dubec, Isabelle, 2009. "ATM Direct Charging Reform: the Effect of Independent Deployers on welfare," MPRA Paper 15818, University Library of Munich, Germany.
  2. Michal Grajek, 2007. "Estimating network effects and compatibility in mobile telecommunications," ESMT Research Working Papers ESMT-07-001, ESMT European School of Management and Technology.
  3. Degryse, Hans & Ferrari, Stijn & Verboven, Frank, 2007. "Investment and Usage of New Technologies: Evidence from a Shared ATM Network," CEPR Discussion Papers, C.E.P.R. Discussion Papers 6592, C.E.P.R. Discussion Papers.
  4. Grajek, Michal, 2010. "Estimating network effects and compatibility: Evidence from the Polish mobile market," Information Economics and Policy, Elsevier, vol. 22(2), pages 130-143, May.
  5. Miko?aj Czajkowski & Maciej Sobolewski, 2011. "Measuring network effects in mobile telecommunications markets with stated-preference valuation methods," International Journal of Management and Network Economics, Inderscience Enterprises Ltd, Inderscience Enterprises Ltd, vol. 2(2), pages 197-215.
  6. Robin S. Lee, 2007. "Vertical Integration and Exclusivity in Two-Sided Markets," Working Papers, NET Institute 07-39, NET Institute, revised Aug 2012.

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