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Independent Service Operators in ATM Markets

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  • Tobias Wenzel

Abstract

This paper studies the impact of entry of non-banks (termed Independent Service Operators, ISOs) into ATM markets. We compare two different regimes by which the ISO may generate income: i) The ISO receives interchange fees and ii) the ISO charges consumers directly. We find that due to the entry of an ISO the size of the total ATM network increases independent of the way the ISO is financed. Account fees increase if the ISO receives interchange fees and decrease if the ISO charges consumers directly. Consumers may not benefit from the entry of the ISO. If a regulator can control the interchange fee, entry by an ISO financed through interchange fees increases consumer surplus, while the entry of a surcharging ISO decreases consumer surplus.
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Suggested Citation

  • Tobias Wenzel, 2014. "Independent Service Operators in ATM Markets," Scottish Journal of Political Economy, Scottish Economic Society, vol. 61(1), pages 26-47, February.
  • Handle: RePEc:bla:scotjp:v:61:y:2014:i:1:p:26-47
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    File URL: http://hdl.handle.net/10.1111/sjpe.12033
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    More about this item

    JEL classification:

    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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