Incompatibility, Product Attributes and Consumer Welfare: Evidence from ATMs

Christopher Knittel and Victor Stango

No 10962, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Incompatibility in market with network effects reduces consumers' ability to "mix and match" components offered by different sellers, but can also spur changes in product attributes that might benefit consumers. In this paper, we estimate the effects of incompatibility on consumers in a classic hardware/software market: ATM cards and machines. We find that while ATM fees ceteris paribus reduce the network benefit from other banks' ATMs, a surge in ATM deployment accompanies the shift to surcharging. This is valuable to consumers and often completely offsets the harm from higher fees. The results suggest that policy discussions of incompatibility must consider not only its direct effect on consumers, but also its effect on product attributes.

JEL-codes: L1 L4 L8 (search for similar items in EconPapers)
Date: 2004-12
New Economics Papers: this item is included in nep-net
Note: PR
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (15)

Published as Knittel Christopher R. & Stango Victor, 2008. "Incompatibility, Product Attributes and Consumer Welfare: Evidence from ATMs," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 8(1), pages 1-42, January.

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Related works:
Journal Article: Incompatibility, Product Attributes and Consumer Welfare: Evidence from ATMs (2008)
Working Paper: Incompatibility, Product Attributes and Consumer Welfare: Evidence from ATMs (2005)
Working Paper: Incompatibility, Product Attributes and Consumer Welfare: Evidence from ATMs (2005)
Working Paper: Incompatibility, Product Attributes and Consumer Welfare: Evidence from ATMs (2004)
Working Paper: Incompatibility, Product Attributes and Consumer Welfare: Evidence from ATMs (2004)
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