IDEAS home Printed from https://ideas.repec.org/a/bpj/rneart/v12y2014i3p323-341n1.html
   My bibliography  Save this article

Do Card Users Benefit From the Use of Proportional Fees?

Author

Listed:
  • Miao Chun-Hui

    () (Department of Economics, University of South Carolina, 1705 College St., Columbia, SC 29208, USA)

Abstract

It has been shown recently that both card networks’ profits and consumer welfare are higher when the networks charge proportional fees than when they charge fixed per-transaction fees. In this paper, we reexamine this result in a market characterized by free entry. We find that private profitability is not always compatible with consumer welfare maximization: while card networks always benefit from the use of proportional fees, consumer welfare may get reduced. A simple calibration exercise confirms that a proportional fee could harm consumers under reasonable parameter values.

Suggested Citation

  • Miao Chun-Hui, 2014. "Do Card Users Benefit From the Use of Proportional Fees?," Review of Network Economics, De Gruyter, vol. 12(3), pages 323-341, January.
  • Handle: RePEc:bpj:rneart:v:12:y:2014:i:3:p:323-341:n:1
    as

    Download full text from publisher

    File URL: https://www.degruyter.com/view/j/rne.2013.12.issue-3/rne-2012-0011/rne-2012-0011.xml?format=INT
    Download Restriction: For access to full text, subscription to the journal or payment for the individual article is required.

    As the access to this document is restricted, you may want to search for a different version of it.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Johannes Muthers & Sebastian Wismer, 2012. "Why Do Platforms Charge Proportional Fees? Commitment and Seller Participation," Working Papers 115, Bavarian Graduate Program in Economics (BGPE).
    2. Wismer, Sebastian, 2013. "Intermediated vs. Direct Sales and a No-Discrimination Rule," Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order 79999, Verein für Socialpolitik / German Economic Association.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bpj:rneart:v:12:y:2014:i:3:p:323-341:n:1. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Peter Golla). General contact details of provider: https://www.degruyter.com .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.