Compatibility and pricing with indirect network effects
Subtitle: evidence from atms
By: Christopher R. Knittel, Victor Stango.
Contributors: Stango, Victor.; National Bureau of Economic Research.
Series: NBER working paper series ;; working paper 10774; Working paper series (National Bureau of Economic Research : Online) ;; working paper no. 10774.
Publisher: National Bureau of Economic Research
Published: 2004
Place of publication: Cambridge, MA
Language: eng
Format: Electronic resource
Subjects: Automated tellers -- Economic aspects -- Econometric models.
Description: "Incompatibility in markets with indirect network effects can affect prices if consumers value "mix and match" combinations of complementary network components.  In this paper, we examine the effects of incompatibility using data from a classic market with indirect network effects: Automated Teller Machines (ATMs).  Our sample covers a period during which higher ATM fees increased incompatibility between ATM cards (which are bundled with deposit accounts) and other banks' ATM machines.  A series of hedonic regressions suggests that incompatibility strengthens the relationship between deposit account pricing and own ATMs, and weakens the relationship between deposit account pricing and competitors' ATMs.  The effects of incompatibility are stronger in areas with high population density, suggesting that high travel costs increase both the strength of network effects and the importance of incompatibility in ATM markets"--National Bureau of Economic Research web site.
Notes: Includes bibliographical references.
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