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On the interaction between vertical and horizontal product differentiation: An application to banking

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  • Degryse, H.A.

    (Tilburg University)

Abstract

The author studies the conditions under which banks offer remote access. Note there exists interaction between location and taste for remote access. Offering remote access is an instrument to (partially) segment depositors according to their taste for that technology. The interaction between location and taste for remote access enhances this effect. Different equilibria emerge as the result of two effects. First, introducing remote access steals depositors from the opponent as the product specification becomes more appealing. Second, deposit rate competition is affected as remote access determines the substitutability of banks. Copyright 1996 by Blackwell Publishing Ltd.

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Bibliographic Info

Paper provided by Tilburg University in its series Open Access publications from Tilburg University with number urn:nbn:nl:ui:12-72562.

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Date of creation: 1996
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Publication status: Published in Journal of Industrial Economics (1996) v.44, p.169-186
Handle: RePEc:ner:tilbur:urn:nbn:nl:ui:12-72562

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Web page: http://www.tilburguniversity.edu/

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