SHARED ATM NETWORKS AND BANKING COMPETITION

In this paper we study the incentives of banks to share their Automati c Teller Machines (ATMs) when they are competitors in the market for d eposits. We construct a stylized model of banking competition which em phasises the distinctive features of ATM compatibility. We find that i n equilibrium either a strict subset of banks share their ATMs or tota l incompatibility prevails. We also derive the implications for ATM co mpatibility of withdrawal fees, interchange bank fees, entry, and depo sitor switching costs. Finally, we investigate the normative implicati ons of our model and draw some policy conclusions.