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 language | English |
---|---|
Pages (from-to) | 335-352 |
Number of pages | 18 |
Journal | International Journal of Industrial Organization |
Volume | 17 |
Issue number | 3 |
Publication status | Published - 1 Apr 1999 |
Keywords
- Banking
- G21
- L13
- Market power
- Multimarket competition