Multimarket Contact in Italian Retail Banking: Competition and Welfare
Jozsef Molnar (),
Roberto Violi and
MPRA Paper from University Library of Munich, Germany
This paper studies banks' competitive behavior on the deposit side of the Italian retail banking industry. We use a structural model to estimate demand for deposit services and test several supply models. We find that both the competitive, differentiated product Bertrand and the perfectly collusive models are rejected against partially collusive models with coalitions based on the participants' market contact. In the best fitting collusive model, the coalition includes 8 banks with at least 19 overlapped regions. Banks with extensive multi-market contacts tend to be less competitive and behave as if they were maximizing their profit jointly, taking into account the competitive fringe of smaller banks.
Keywords: Competition; Multi-market contacts; Retail banking; Welfare analysis (search for similar items in EconPapers)
JEL-codes: C52 D43 G21 L13 (search for similar items in EconPapers)
Date: 2010-10, Revised 2013-05
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Forthcoming in International Journal of Industrial Organization 5.31(2013): pp. 368-381
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Journal Article: Multimarket contact in Italian retail banking: Competition and welfare (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:48610
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