Deregulating Self-Regulated Shared Atm Networks

The development of shared ATM networks raises important issues of competition, cooperation and standardization. Sharing necessarily involves cooperation among competing ATM owners and card issuing financial institutions. Networks adopt rules that regulate members' pricing decisions also involve issues of standardization and competition. In particular, most networks make ATM owners sell at wholesale by mandating of interchange fees to replace retail market competition among ATM owners. Networks argue that these rules are necessary to present consumers with a standardized product instead of the chaos of the marketplace and to maintain the integrity of the complementary products offered by members. These are, of course, similar to the standardization and compatibility issues raised in other networks contexts. The paper analyzes the need for this system of fixed interchange fees and sets out a proposal to replace the current system with free market price competition by ATM owners. Keywords: shared ATM networksfixed interchange feesstandardizationfree market 1Professor of Economics and Law, Georgetown University Law Center. I would like thank Paul David, Thomas Krattenmaker, Daniel Prywes, Garth Saloner, Robert Skitol, Scott Engle and Warren Schwartz for helpful comments on previous drafts. This paper also reflects joint work with Nicholas Economides. 1Professor of Economics and Law, Georgetown University Law Center. I would like thank Paul David, Thomas Krattenmaker, Daniel Prywes, Garth Saloner, Robert Skitol, Scott Engle and Warren Schwartz for helpful comments on previous drafts. This paper also reflects joint work with Nicholas Economides. Notes 1Professor of Economics and Law, Georgetown University Law Center. I would like thank Paul David, Thomas Krattenmaker, Daniel Prywes, Garth Saloner, Robert Skitol, Scott Engle and Warren Schwartz for helpful comments on previous drafts. This paper also reflects joint work with Nicholas Economides.