Oligopoly Model of a Debit Card Network
AbstractThe paper builds an oligopoly model of a debit card network. It examines the competition between debit card issuers. We show that there is an optimal pricing for the debit card network, which maximizes all issuer's revenues. The paper also shows that establishing a link between debit card networks averages the costs provided that there is no growth in the customer's usage of the networks, resulting from the link.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 2460.
Date of creation: 28 Jul 2006
Date of revision: 26 Feb 2007
debit card; payment networks; switch fees; access pricing;
Find related papers by JEL classification:
- G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
- L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
This paper has been announced in the following NEP Reports:
- NEP-ALL-2007-04-09 (All new papers)
- NEP-COM-2007-04-09 (Industrial Competition)
- NEP-IND-2007-04-09 (Industrial Organization)
- NEP-MIC-2007-04-09 (Microeconomics)
- NEP-NET-2007-04-09 (Network Economics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Sujit Chakravorti & Roberto Roson, 2004.
"Platform competition in two-sided markets: the case of payment networks,"
Working Paper Series
WP-04-09, Federal Reserve Bank of Chicago.
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"A Study of the Interrelated Bilateral Transactions in Credit Card Networks,"
Law and Economics
- Sujit Chakravorti & Alpa Shah, 2001. "A study of the interrelated bilateral transactions in credit card networks," Occasional Paper; Emerging Payments EPS-2001-2, Federal Reserve Bank of Chicago.
- Gans Joshua S & King Stephen P, 2003. "The Neutrality of Interchange Fees in Payment Systems," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 3(1), pages 1-18, January.
- Fumiko Hayashi & Rick Sullivan & Stuart E. Weiner, 2006. "A guide to the ATM and debit card industry - 2006 update," Monograph, Federal Reserve Bank of Kansas City, number 2006agttaadci2.
- repec:fth:bfsefi:e18 is not listed on IDEAS
- Kauko, Karlo, 2000. "The Microeconomics of Innovation: Oligopoly Theoretic Analyses with Applications to Banking and Patenting," Scientific Monographs E:18/2000, Bank of Finland.
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