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Strategic Incompatibility in ATM Markets

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  • Christopher R. Knittel
  • Victor Stango

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

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 12604.

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Date of creation: Oct 2006
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Handle: RePEc:nbr:nberwo:12604

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Citations

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Cited by:
  1. 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, vol. 2(2), pages 197-215.
  2. Ferrari, S. & Verboven, F.L. & Degryse, H.A., 2008. "Investment and Usage of New Technologies: Evidence from a Shared ATM Network," Discussion Paper 2008-1, Tilburg University, Center for Economic Research.
  3. Robin S. Lee, 2007. "Vertical Integration and Exclusivity in Two-Sided Markets," Working Papers 07-39, NET Institute, revised Aug 2012.
  4. 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.
  5. 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.
  6. Donze Jocelyn & Dubec Isabelle, 2011. "ATM Direct Charging Reform: the Effect of Independent Deployers on Welfare," Review of Network Economics, De Gruyter, vol. 10(2), pages 1-23, June.

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