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Strategic Incompatibility in ATM Markets

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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 standalone 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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File URL: http://www.netinst.org/Knittel-Stango_2006.pdf
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Paper provided by NET Institute in its series Working Papers with number 06-08.

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Length: 32 pages
Date of creation: Sep 2006
Date of revision: Sep 2006
Handle: RePEc:net:wpaper:0608
Contact details of provider: Web page: http://www.NETinst.org/

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Find related papers by JEL classification:
  • K21 - Law and Economics - - Regulation and Business Law - - - Antitrust Law
  • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
  • L12 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Monopoly; Monopolization Strategies
  • L4 - Industrial Organization - - Antitrust Issues and Policies
  • L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices
  • L44 - Industrial Organization - - Antitrust Issues and Policies - - - Antitrust Policy and Public Enterprise, Nonprofit Institutions, and Professional Organizations
  • L84 - Industrial Organization - - Industry Studies: Services - - - Personal, Professional, and Business Services

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Cited by:

  1. 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.
  2. 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.
  3. Donze, Jocelyn & Dubec, Isabelle, 2009. "ATM Direct Charging Reform: the Effect of Independent Deployers on welfare," MPRA Paper 15818, University Library of Munich, Germany.
  4. 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.
  5. repec:dgr:kubtil:2007035 is not listed on IDEAS
  6. Robin S. Lee, 2007. "Vertical Integration and Exclusivity in Two-Sided Markets," Working Papers 07-39, NET Institute, revised Aug 2012.

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