2,040 research outputs found
The Welfare Consequences of ATM Surcharges: Evidence from a Structural Entry Model
We estimate a structural model of the market for automatic teller machines (ATMs) in order to evaluate the implications of regulating ATM surcharges on ATM entry and consumer and producer surplus. We estimate the model using data on firm and consumer locations, and identify the parameters of the model by exploiting a source of local quasi-experimental variation, that the state of Iowa banned ATM surcharges during our sample period while the state of Minnesota did not. We develop new econometric methods that allow us to estimate the parameters of equilibrium models without computing equilibria. Monte Carlo evidence shows that the estimator performs well. We find that a ban on ATM surcharges reduces ATM entry by about 12 percent, increases consumer welfare by about 35 percent and lowers producer profits by about 20 percent. Total welfare remains about the same under regimes that permit or prohibit ATM surcharges and is about 17 percent lower than the surplus maximizing level. This paper can help shed light on the theoretically ambiguous implications of free entry on consumer and producer welfare for differentiated products industries in general and ATMs in particular.
The Welfare Consequences of ATM Surcharges: Evidence from a StructuralEntry Model
We estimate a structural model of the market for automatic teller
machines (ATMs) in order to evaluate the implications of regulating ATM
surcharges on ATM entry and consumer and producer surplus. We estimate
the model using data on firm and consumer locations, and identify the
parameters of the model by exploiting a source of local
quasi-experimental variation, that the state of Iowa banned ATM
surcharges during our sample period while the state of Minnesota did
not. We develop new econometric methods that allow us to estimate the
parameters of equilibrium models without computing equilibria. Monte
Carlo evidence shows that the estimator performs well. We find that a
ban on ATM surcharges reduces ATM entry by about 12 percent, increases
consumer welfare by about 10 percent and lowers producer profits by
about 10 percent. Total welfare remains about the same under regimes
that permit or prohibit ATM surcharges and is about 17 percent lower
than the surplus maximizing level. This paper can help shed light on the
theoretically ambiguous implications of free entry on consumer and
producer welfare for differentiated products industries in general and
ATMs in particular
Cooperation for Innovation in Payment Systems: The Case of Mobile Payments
In this paper, we provide a definition of mobile payments and we analyze the markets that could be targeted by mobile payment service providers, both in developed and in developing countries. Focusing on the case of developed countries, we introduce five cooperation models that have emerged or could emerge between banks, mobile network operators, and payment systems, for the development of this payment method.mobile payments; payment systems; mobile banking; mobile commerce.
Incompatibility, Product Attributes and Consumer Welfare: Evidence from ATMs
Incompatibility in markets with network effects can either benefit or
harm consumers. Incompatibility reduces consumers' ability to "mix
and match" components offered by different sellers, but can also be
associated with changes in product attributes that might benefit
consumers. In this paper, we estimate the effects of incompatibility in
a classic hardware/software market: ATM cards and machines. Our
empirical model allows us to measure the indirect network effect
relating the value of ATM cards to ATM availability. It also allows us
to measure the effects of incompatibility as measured by ATM fees. Our
sample contains a relatively discrete move toward incompatibility after
1996, when banks began to impose surcharges on non-customers using their
ATM machines. We provide estimates of the partial equilibrium effects of
increased incompatibility on consumer welfare, finding that ATM fees
ceteris paribus reduce the indirect network effect associated with other
banks' ATMs. However, a surge in ATM deployment accompanies the shift to
surcharging and in many cases completely offsets the reduction in
welfare associated with higher fees. This suggests that welfare analyses
should consider the interaction between incompatibility and changes in
product attributes
A comparative study on marketing of Banking products and customer services and satisfaction level in Gujarat
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The use of prepaid cards for banking the poor
Prepaid products can become an effective instrument for banking the poor, as they can be used for collecting microdeposits and so operate as a low-cost account. Prepaid platforms have characteristics that make them especially useful for developing low-cost microfinance business models. Indeed, customers using prepaid systems do not need bank accounts or debit or credit cards. Prepaid issuers do not need to develop or invest in new technologies, as this mechanism can be used on a range of platforms, including PCs, mobile phones, hand-held and set-top boxes. Furthermore, prepaid products are specially designed for offering services demanded by the poor, such as micropayments, microdeposits and even microcredits. Lastly, they allow users to monitor their cash flow by receiving statements (some providers offer this feature online, others provide physical statements) or accessing balances through PCs, mobile phones, hand-held and set-top boxes. Besides collecting microdeposits, prepaid products (or SVCs as they are called in the United States) offer other services that can be very valuable for serving the unbanked population. As explained in this paper, prepaid products generally lack the identification and credit requirements that effectively bar millions of individuals from opening traditional bank accounts, especially in the United States. Moreover, prepaid products can be purchased and reloaded at a growing number of locations other than bank branches, such as check cashers, convenience stores and other retailers. Prepaid instruments can also provide immediate availability of funds at a cost that, in some cases, is lower than other alternatives for unbanked consumers. Also, prepaid products are difficult to overdraw, thus reducing the likelihood of unexpected fees. Lastly, many prepaid issuers offer some sort of bill pay option, especially branded cards that enable signature-based transactions, and a significant number of them offer remittances.Prepaid card; microdeposits; mobile phone; store value card; e-money; banking the poor;
Assessing excess profits from different entry regulations
Entry regulations affecting professional services such as pharmacies are common practice in many European countries. We assess the impact of entry regulations on profits estimating a structural model of entry using the information provided by a policy experiment. We use the case of different regional policies governing the opening of new pharmacies in Spain to show that structural models of entry ought to be estimated with data from policy experiments to pin down how entry regulations change payoffs functions of the incumbents. Contrary to the public interest rationales, regulations are not boosting only small town pharmacies payoffs nor increasing all pharmacies payoffs alike. The gains from regulations are very unevenly distributed,suggesting that private interests are shaping the current mix of entry and markup regulations.Entry, regulation, professional services
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