Strategic Incompatibility in ATM Markets

32 Pages Posted: 23 Oct 2006

See all articles by Christopher R. Knittel

Christopher R. Knittel

Massachusetts Institute of Technology (MIT) - Center for Energy and Environmental Policy Research (CEEPR); National Bureau of Economic Research (NBER)

Victor Stango

UC Davis Graduate School of Management

Multiple version iconThere are 2 versions of this paper

Date Written: September 2006

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.

Suggested Citation

Knittel, Christopher R. and Stango, Victor, Strategic Incompatibility in ATM Markets (September 2006). NET Institute Working Paper No. 06-08, Available at SSRN: https://ssrn.com/abstract=939307 or http://dx.doi.org/10.2139/ssrn.939307

Christopher R. Knittel (Contact Author)

Massachusetts Institute of Technology (MIT) - Center for Energy and Environmental Policy Research (CEEPR) ( email )

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National Bureau of Economic Research (NBER)

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Victor Stango

UC Davis Graduate School of Management ( email )

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Davis, CA 95616
United States

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