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Payment Card Systems as an Example of two-sided Markets - a Challenge for Antitrust Authorities

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  • Tosza, Katarzyna
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    Abstract

    This article aims to present the concept of two-sided markets on the example of payment card systems, which have attracted the attention of regulatory and antitrust authorities in recent years. First, the paper offers a few insights into the basic economic theory behind two-sided markets. Second, it presents a brief description of payment card systems and their features. The following analysis focuses on arguments that speak in favour of a regulatory or antitrust intervention into payment card systems. Finally, some of the potential problems that antitrust authorities must face when assessing two-sided markets are presented on the basis of an assessment of the decisional practice of the UOKiK President and the European Commission.

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    File URL: http://mpra.ub.uni-muenchen.de/23822/
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    Bibliographic Info

    Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 23822.

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    Date of creation: 2009
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    Publication status: Published in Yearbook of Antitrust and Regulatory Studies 2(2).2009(2009): pp. 125-140
    Handle: RePEc:pra:mprapa:23822

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    Related research

    Keywords: two-sided markets; antitrust v. regulation; interchange fees; payment card systems;

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    References

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    1. Jean-Charles Rochet & Jean Tirole, 2003. "Platform Competition in Two-Sided Markets," Journal of the European Economic Association, MIT Press, vol. 1(4), pages 990-1029, 06.
    2. Emch Eric & Thompson T. Scott, 2006. "Market Definition and Market Power in Payment Card Networks," Review of Network Economics, De Gruyter, vol. 5(1), pages 1-16, March.
    3. Jorge A, Ferrando & Jean J, Gabszewicz & Didier Laussel & Nathalie Sonnac, 2004. "Two-Sided Network Effects and Competition : An Application to Media Industries," Working Papers 2004-09, Centre de Recherche en Economie et Statistique.
    4. Garcia-Swartz Daniel D. & Hahn Robert W. & Layne-Farrar Anne, 2006. "The Move Toward a Cashless Society: A Closer Look at Payment Instrument Economics," Review of Network Economics, De Gruyter, vol. 5(2), pages 1-24, June.
    5. Erich Emch & T. Scott Thompson, 2006. "Market Definition and Market Power in Payment Card Networks," EAG Discussions Papers 200609, Department of Justice, Antitrust Division.
    6. Chang Howard & Evans David S. & Garcia Swartz Daniel D., 2005. "The Effect of Regulatory Intervention in Two-Sided Markets: An Assessment of Interchange-Fee Capping in Australia," Review of Network Economics, De Gruyter, vol. 4(4), pages 1-31, December.
    7. John Vickers, 2005. "Public policy and the invisible price : competition law, regulation, and the interchange fee," Proceedings – Payments System Research Conferences, Federal Reserve Bank of Kansas City, issue May, pages 231-247.
    8. Lapo Filistrucchi, 2008. "A SSNIP test for two-sided markets: the case of media," Working Papers 08-34, NET Institute, revised Oct 2008.
    9. Guerin-Calvert Margaret E. & Ordover Janusz A., 2005. "Merchant Benefits and Public Policy towards Interchange: An Economic Assessment," Review of Network Economics, De Gruyter, vol. 4(4), pages 1-31, December.
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