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Title:On the incentives to form strategic coalitions in ATM markets PDF Logo
Authors:Wenzel, Tobias
Issue Date:2008
Series/Report no.:IWQW discussion paper series 05/2008
Abstract:This paper studies ATM coalitions in retail banking. We ask when it is profitable for banks to make agreements which ban direct ATM transaction fees. In the case of a coalition banks loose income from ATM transactions but relax competition in the banking market. We find that such agreements are profitable when the interchange fee is sufficiently high. When banks can collude on the interchange they always form a coalition. Coalitions may harm consumers but lead to higher total welfare. Moreover, we find that smaller banks have larger incentives to form ATM coalitions. Investment in ATM networks is typically higher with a coalition.
Subjects:Banking competition
ATM networks
Document Type:Working Paper
Appears in Collections:FAU Discussion Papers in Economics, Friedrich-Alexander-Universität Erlangen-Nürnberg

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