Abstract

http://ssrn.com/abstract=2173252
 


 



Competition before Sunset: The Case of the Finnish ATM Market


Maria Kopsakangas-Savolainen


Finnish Environment Institute; University of Oulu - Department of Economics; Thule Institute

Tuomas Takalo


Bank of Finland, Monetary Policy and Research Department

November 6, 2012

Bank of Finland Research Discussion Paper No. 32/2012

Abstract:     
We build a simple model to study service fee competition between an incumbent and an independent ATM deployer, and its optimal regulation. We use the model to analyze an actual regulation of such a market by competition authorities in Finland. We find that socially optimal first-best fees would imply negative profits for the independent deployer, calling for a Ramsey regulation. While the Finnish regulation pushes the foreign fee downwards towards its socially optimal level, the regulated fees are likely to remain too high from the welfare point of view. In contrast with the actual regulation, it would be essential to regulate the independent deployer's interchange fee, as the incumbent deployer internalizes the effect of its foreign fee on consumer usage of the rival's network and has little incentive for foreclosure.

Number of Pages in PDF File: 34

Keywords: ATM industry, regulation, competition policy, cash availability, retail payments

JEL Classification: L41, L51, L13, K21, G23

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Date posted: November 10, 2012  

Suggested Citation

Kopsakangas-Savolainen, Maria and Takalo, Tuomas, Competition before Sunset: The Case of the Finnish ATM Market (November 6, 2012). Bank of Finland Research Discussion Paper No. 32/2012. Available at SSRN: http://ssrn.com/abstract=2173252 or http://dx.doi.org/10.2139/ssrn.2173252

Contact Information

Maria Kopsakangas-Savolainen
Finnish Environment Institute ( email )
PO Box 413
Oulu, 90014
Finland
University of Oulu - Department of Economics ( email )
PO Box 4600
FIN-90014 University of Oulu
Finland
Thule Institute ( email )
Oulu
Finland
Tuomas Takalo (Contact Author)
Bank of Finland, Monetary Policy and Research Department ( email )
P.O. Box 160
Helsinki, FIN-00101
Finland
+358108312370 (Phone)
HOME PAGE: http://www.takalo.net
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