Discussion of “Coordinated Investment in a Shared ATM network” by Stijn Ferrari, Frank Verboven...
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Transcript of Discussion of “Coordinated Investment in a Shared ATM network” by Stijn Ferrari, Frank Verboven...
Discussion of“Coordinated Investment in a Shared ATM network” by Stijn
Ferrari, Frank Verboven & Hans Degryse
Lapo FilistrucchiTilburg University & University of
Siena
Economics of Payment Systems
Paris, October 2007
The paperNice paper
Well written
More advanced then it claims
Discussion 1
Not easy to discuss
Main:
Inelastic per capita cash withdrawals
Compatibility
Introducing fees for policy simulation
Welfare standards
Minor:
Some typos and incomplete references
Q=2.07 comes from?
Discussion 2Assumption that
Per capita cash withdrawals (ATM+branches) are inelastic with respect to the number of ATMs
despite
Increasing relationship between ATM cash withdrawals and number of ATMs
so that
Consumers substitute away from cash withdrawals at branches to cash withdrawals at ATM
Assumption
•Clearly due to lack of data on total per capita cash withdrawals at local market level
•Claimed to be justified because simple correlation shows that consumers do not withdraw lower amounts of cash at ATMs when more ATMS are introduced
Discussion 3In practice assumption that:
•No effect of the number of ATMs on the amount a consumer spends
•At the aggregate introduction of ATMs lead only to cost savings, no effect on economic activity
Realistic?
•Think to be in a shopping mall in a rainy Saturday afternoon…
It would be best to allow for elastic per capita cash withdrawals.
If not possible, discuss what is the likely bias that the assumption introduces
Surely an effect on the estimates of cost savings
Discussion 4
“(In)compatibility”
Used in the previous literature
But
A bit ambiguous…
- Technical incompatibility (S.E.P.A) or just due to “on-other fees” and surcharges?
- Case of Italy?
At least a note…
Discussion 5
Policy simulation:
- Introduction of uniform fees
But
- What if only “on-other” fees? Still underinvestment?
Claim discussed in the previous literature, but abstracting from variable cost incentives
Also
- which standard for social optimum?
EU DG competition, RBA -> (fair share) consumer surplus
First best : consumer surplus ↓ producer surplus↑ government loss↑ !?