Market power in local banking monopolies |
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Authors: | Paolo Coccorese |
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Institution: | Department of Economics and Statistics, CELPE and CSEF, University of Salerno, Via Ponte Don Melillo, 84084 Fisciano, SA, Italy |
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Abstract: | By means of two NEIO techniques, this paper analyzes the conduct of a group of Italian single-branch banks operating as monopolists in small local areas (municipalities) in the years 1988–2005, in order to assess pricing behavior in highly concentrated banking markets. Both tests strongly reject the hypothesis of pure monopoly pricing: regardless the advantageous condition, these banks are able to exploit only partially their market power, principally by reason of the nearby competition, the latest banking consolidation trend and the local presence of big banks. Employing another sample, we also show that in duopolistic markets the conduct of single-branch banks is virtually competitive. |
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Keywords: | G21 L10 L13 |
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