TY - JOUR
T1 - Investment and usage of new technologies
T2 - Evidence from a shared ATM network
AU - Ferrari, S.
AU - Verboven, F.L.
AU - Degryse, H.A.
N1 - Appeared earlier as CentER Discussion Paper 2008-01
PY - 2010
Y1 - 2010
N2 - The success of new technologies depends on both the firms' investment and consumers' usage decisions. We study this problem in a shared ATM network. Inefficiencies may arise because banks coordinate investment, and consumers may not make proper use of the network. Based on an empirical model of ATM investment and demand, we find that banks substantially underinvested in ATMs, in contrast with earlier findings of strategic overinvestment in the United States. Furthermore, ATM usage was too low, because regulation prohibited fees for cash withdrawals. A direct promotion of investment improves welfare, but fees for branch cash withdrawals would be more effective. (JEL G21, G31, 033)
AB - The success of new technologies depends on both the firms' investment and consumers' usage decisions. We study this problem in a shared ATM network. Inefficiencies may arise because banks coordinate investment, and consumers may not make proper use of the network. Based on an empirical model of ATM investment and demand, we find that banks substantially underinvested in ATMs, in contrast with earlier findings of strategic overinvestment in the United States. Furthermore, ATM usage was too low, because regulation prohibited fees for cash withdrawals. A direct promotion of investment improves welfare, but fees for branch cash withdrawals would be more effective. (JEL G21, G31, 033)
M3 - Article
SN - 0002-8282
VL - 100
SP - 1046
EP - 1079
JO - American Economic Review
JF - American Economic Review
IS - 3
ER -