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Product Innovation and Network Survival in the U.S. ATM and Debit Card Industry

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  • Zhu Wang

    (Federal Reserve Bank of Kansas City)

  • Fumiko Hayashi

    (Federal Reserve Bank of Kansas City)

Abstract

This paper provides a model to explain the shakeout of the U.S. ATM and debit card industry, which emphasizes the role that a major product innovation â introducing the debit function in the mid 1980s â played in driving the network consolidation. Consistent with the theory, our empirical findings show that large networks had a better chance of adopting the debit innovation and surviving the shakeout. However, in contrast to previous studies, we find little advantage of being an early entrant in this network industry. Rather, ownership and organizational structure had an important influence on network size and survival.

Suggested Citation

  • Zhu Wang & Fumiko Hayashi, 2011. "Product Innovation and Network Survival in the U.S. ATM and Debit Card Industry," 2011 Meeting Papers 725, Society for Economic Dynamics.
    • Handle: RePEc:red:sed011:725
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    References listed on IDEAS

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    Cited by:

    1. Zhu Wang, 2010. "Regulating debit cards: the case of ad valorem fees," Economic Review, Federal Reserve Bank of Kansas City, vol. 95(Q I), pages 71-93.
    2. Bernardo Batiz-Lazo & Gustavo A. Del Angel, 2016. "The Dawn of the Plastic Jungle: The Introduction of the Credit Card in Europe and North America, 1950-1975," Economics Working Papers 16107, Hoover Institution, Stanford University.

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