Multimarket competition in banking, with an example from the Portuguese market

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51 Citations (Scopus)

Abstract

Banks typically have more than one branch and their activities usually span over several markets. This multilocational nature of banks generates equilibrium price dispersion. The paper proposes a spatial competition model to explain price differences across banks in the deposits market. The model allows to separate two different sources of observed market power: collusion in the industry and product differentiation induced by location in local markets. An application to Portuguese commercial banking is reported as an illustration.

Original languageEnglish
Pages (from-to)335-352
Number of pages18
JournalInternational Journal of Industrial Organization
Volume17
Issue number3
Publication statusPublished - 1 Apr 1999

Keywords

  • Banking
  • G21
  • L13
  • Market power
  • Multimarket competition

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