A Study of the Interrelated Bilateral Transactions in Credit Card Networks
AbstractOver the last decade, consumers have tripled their use of credit cards as more merchants have increased their acceptance of them. This increase suggests that incentives in today's marketplace favor greater credit card use by consumers and acceptance by merchants. In this paper, we study the set of interrelated bilateral transactions in credit card networks. First, we survey the recent theoretical papers using this approach and find that there is a lack of consensus regarding the optimal set of pricing policies. Second, we explore each of these interrelated transactions emphasizing common market practices and the underlying regulatory and legal framework. Third, we analyze the impact of certain credit card market practices on competing payment instruments such as debit cards.
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Bibliographic InfoPaper provided by EconWPA in its series Law and Economics with number 0111001.
Length: 38 pages
Date of creation: 05 Nov 2001
Date of revision:
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credit cards; rents; antitrust; networks;
Other versions of this item:
- 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.
- K - Law and Economics
This paper has been announced in the following NEP Reports:
- NEP-ALL-2001-11-21 (All new papers)
- NEP-ENT-2001-11-21 (Entrepreneurship)
- NEP-LAW-2001-11-21 (Law & Economics)
- NEP-NET-2001-11-21 (Network Economics)
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