Friday, October 29, 2010
Posted by D. Daniel Sokol
Jocelyn Donze and Isabelle Dubecy (both Toulouse School of Economics (GREMAQ)) discuss ATM Direct Charging Reform: the Effect of Independent Deployers on Welfare.
ABSTRACT: In Australia, on the 3rd of March 2009, the interchange fees on shared ATM transactions were removed and replaced by fees directly set and received by the ATM owners. We develop a model to study how the entry of independent ATM deployers (IADs) aspects welfare under this direct charging scheme. Paradoxically, we show that the IAD entry benefits banks. It may be good for consumers if they sufficiently value the associated growth of the ATM network.