Incompatibility, Product Attributes and Consumer Welfare: Evidence from ATMs

Christopher Knittel and Victor Stango
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Victor Stango: Department of Economics, University of California Davis

No 16, Working Papers from University of California, Davis, Department of Economics

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 thatmight beneÞt consumers. In this paper, we estimate the effects of incompatibility on consumersin a classic hardware/software market: ATM cards and machines. We Þnd that while ATM feesceteris paribus reduce the network beneÞt from other banks? ATMs, a surge in ATM deploymentaccompanies the shift to surcharging. This is valuable to consumers and often completely offsetsthe harm from higher fees. The results suggest that policy discussions of incompatibility mustconsider not only its direct effect on consumers, but also its effect on product attributes.

Keywords: ATMs; incompatibility; compatibility; discrete choice; network effects; demand estimation (search for similar items in EconPapers)
JEL-codes: C2 L1 L4 L8 (search for similar items in EconPapers)
Pages: 43
Date: 2005-10-09
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https://repec.dss.ucdavis.edu/files/uEkifNFkeBPeeTjuh1GvjriZ/05-32.pdf (application/pdf)

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 (2004)
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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