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Strategic Incompatibility in ATM Markets

Author

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  • Christopher Knittel
  • Victor Stango

    (Department of Economics, University of California Davis)

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 serveas a mechanism for siphoning depositors away from competitors or for creating deposit accountdifferentiation. Our empirical framework can empirically distinguish surcharging motivated bythis strategic concern from surcharging that simply maximizes ATM profit considered as a standaloneoperation. The results are consistent with such behavior by large banks, but not by smallbanks. For large banks, the effect of incompatibility seems to operate through higher depositaccount fees rather than increased deposit account base

Suggested Citation

  • Christopher Knittel & Victor Stango, 2006. "Strategic Incompatibility in ATM Markets," Working Papers 225, University of California, Davis, Department of Economics.
    • Handle: RePEc:cda:wpaper:225
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Donze Jocelyn & Dubec Isabelle, 2011. "ATM Direct Charging Reform: the Effect of Independent Deployers on Welfare," Review of Network Economics, De Gruyter, vol. 10(2), pages 1-23, June.
    2. Stijn Ferrari & Frank Verboven & Hans Degryse, 2010. "Investment and Usage of New Technologies: Evidence from a Shared ATM Network," American Economic Review, American Economic Association, vol. 100(3), pages 1046-1079, June.
    3. Robin S. Lee, 2013. "Vertical Integration and Exclusivity in Platform and Two-Sided Markets," American Economic Review, American Economic Association, vol. 103(7), pages 2960-3000, December.
    4. Robin S. Lee, 2014. "Competing Platforms," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 23(3), pages 507-526, September.
    5. Michal Grajek, 2003. "Estimating Network Effects and Compatibility in Mobile Telecommunications," CIG Working Papers SP II 2003-26, Wissenschaftszentrum Berlin (WZB), Research Unit: Competition and Innovation (CIG).
    6. Tobias Wenzel, 2014. "Independent Service Operators in ATM Markets," Scottish Journal of Political Economy, Scottish Economic Society, vol. 61(1), pages 26-47, February.
    7. Ioana Chioveanu & Ramon Fauli‐Oller & Joel Sandonis & Juana Santamaria, 2009. "Atm Surcharges: Effects On Deployment And Welfare," Journal of Industrial Economics, Wiley Blackwell, vol. 57(3), pages 613-635, September.
    8. Christopher R. Knittel & Victor Stango, 2009. "How Does Incompatibility Affect Prices?: Evidence From Atm'S," Journal of Industrial Economics, Wiley Blackwell, vol. 57(3), pages 557-582, September.
    9. Sobolewski, Maciej & Czajkowski, MikoŁaj, 2012. "Network effects and preference heterogeneity in the case of mobile telecommunications markets," Telecommunications Policy, Elsevier, vol. 36(3), pages 197-211.
    10. 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.
    11. 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.

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    More about this item

    Keywords

    atm; industrial;

    JEL classification:

    • D2 - Microeconomics - - Production and Organizations
    • E3 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles
    • L6 - Industrial Organization - - Industry Studies: Manufacturing

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