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Discriminatory fees, coordination and investment in shared ATM networks

Author

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  • Stijn Ferrari

    () (National Bank of Belgium, Financial Stability Department
    Catholic University of Leuven)

Abstract

This paper empirically examines the effects of discriminatory fees on ATM investment and welfare, and considers the role of coordination in ATM investment between banks. Our main findings are that foreign fees tend to reduce ATM availability and (consumer) welfare, whereas surcharges positively affect ATM availability and the different welfare components when the consumers' price elasticity is not too large. Second, an organization of the ATM market that contains some degree of coordination between the banks may be desirable from a welfare perspective. Finally, ATM availability is always higher when a social planner decides on discriminatory fees and ATM investment to maximize total welfare. This implies that there is underinvestment in ATMs, even in the presence of discriminatory fees

Suggested Citation

  • Stijn Ferrari, 2010. "Discriminatory fees, coordination and investment in shared ATM networks," Working Paper Research 184, National Bank of Belgium.
  • Handle: RePEc:nbb:reswpp:201001-29
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    File URL: https://www.nbb.be/doc/oc/repec/reswpp/wp184en.pdf
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    References listed on IDEAS

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    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    investment; coordination; ATMs; network industries; empirical entry models; spatial discrete choice demand models;

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General
    • L50 - Industrial Organization - - Regulation and Industrial Policy - - - General
    • L89 - Industrial Organization - - Industry Studies: Services - - - Other

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