TY  - JOUR
AU  - Knittel,Christopher R.
AU  - Stango,Victor
TI  - Incompatibility, Product Attributes and Consumer Welfare: Evidence from ATMs
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 10962
PY  - 2004
Y2  - December 2004
UR  - http://www.nber.org/papers/w10962
L1  - http://www.nber.org/papers/w10962.pdf
N1  - Author contact info:
Christopher R. Knittel
MIT Sloan School of Management
100 Main Street, E62-513
Cambridge, MA 02142
E-Mail: knittel@mit.edu

Victor Stango
Graduate School of Management
University of California, Davis
One Shields Avenue
Davis, CA 95616
Tel: 530/752-3535
Fax: 530/752-2924
E-Mail: vstango@ucdavis.edu
AB  - Incompatibility in market with network effects reduces consumers' ability to "mix and match" components offered by different sellers, but can also spur changes in product attributes that might benefit consumers. In this paper, we estimate the effects of incompatibility on consumers in a classic hardware/software market: ATM cards and machines. We find that while ATM fees ceteris paribus reduce the network benefit from other banks' ATMs, a surge in ATM deployment accompanies the shift to surcharging. This is valuable to consumers and often completely offsets the harm from higher fees. The results suggest that policy discussions of incompatibility must consider not only its direct effect on consumers, but also its effect on product attributes.
ER  -