Home
Archives
Subscribe
Getting Published
About RNE
Contact RNE
Home
  home > latest issue > Abstract: Incompatibility and Investment in ATM Networks

Abstract

Incompatibility and Investment in ATM Networks

The Review of Network Economics

Vol. 6, Issue 1 - March 2007, pp 1 - 15


Authors
  Timothy H. Hannan
Federal Reserve Board
E-mail: [email protected]

Ron Borzekowski
Federal Reserve Board

Abstract
  Incompatibility across rival systems can influence incentives to invest in product changes beneficial to the consumer. We investigate this phenomenon in the case of bank ATM networks, where the number of ATM locations is a measure of product quality and surcharge fees serve as an index of incompatibility. Using as a natural experiment the lifting of a surcharge ban in Iowa (and not in neighbouring states), we find that the associated increase in incompatibility for Iowa banks caused a substantial increase in the number of ATM locations offered to customers. This effect is larger (in percentage terms) for larger banks.

Keywords: Banking, surcharges, natural experiment

View PDF

[ next abstract ]