Ramón Faulí-Oller () (Universidad de Alicante) Ioana Chioveanu () (Universidad de Alicante) Joel Sandonís () (Universidad de Alicante) Juana Santamaria-Garcia () (Universidad de Alicante)
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This paper analyzes the effects of ATM surcharges on deployment and welfare, in a model where banks compete for ATM and banking services. Foreign fees, surcharges and the interchange fee are endogenously determined. We find that, when the interchange fee is cooperatively fixed by banks to maximize joint profits, surcharges should be allowed, as they neutralize the collusive effect of the interchange fee. As a consequence, ATM deployment is higher and retail prices lower than without surcharges, increasing consumer surplus and social welfare.
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Paper provided by Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie) in its series Working Papers. Serie AD with number
2007-12.
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