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Die Großen Zwei – Wettbewerb im Kreditkartenmarkt? / The Big Two – How Competitive is the Market for Credit Cards

Author

Listed:
  • Dulleck Uwe

    () (Institut für Wirtschaftswissenschaften, Universität Wien, Hohenstaufengasse 9, A-1010 Wien, Austria)

  • Friederiszick Hans W.

    () (RACR, Südenstr. 56, D-12169 Berlin, Germany)

Abstract

The credit card market is made up of two main firms: VISA and Mastercard/Eurocard. The influence of the “Big Two” has triggered both in the USA and Europe, competition law concerns and placed the (as yet little economically analyzed) credit card market in the centre of microeconomic analysis. The present article introduces the essential market conditions of the credit card market, and presents results from competition law discourse in a broader economic framework. The crucial question from the competition law perspective of the market dominance of the “Big Two” is analyzed for European countries. Cost indicators (internet costs, interest rate levels, credit risk) are employed to show that the variable costs do not influence market prices in the credit card market. This result points to a dominance of VISA und Mastercard/Eurocard in the credit card market in Europe. Further evidence for this dominance is documented by special contracts.

Suggested Citation

  • Dulleck Uwe & Friederiszick Hans W., 2004. "Die Großen Zwei – Wettbewerb im Kreditkartenmarkt? / The Big Two – How Competitive is the Market for Credit Cards," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 224(4), pages 445-470, August.
  • Handle: RePEc:jns:jbstat:v:224:y:2004:i:4:p:445-470
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    References listed on IDEAS

    as
    1. Fabio M. Manenti & Ernesto Somma, 2002. "Plastic Clashes: Competition among Closed and Open Systems in the Credit Card Industry," Industrial Organization 0211012, EconWPA.
    2. 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.
    3. Schmalensee, Richard, 2002. "Payment Systems and Interchange Fees," Journal of Industrial Economics, Wiley Blackwell, vol. 50(2), pages 103-122, June.
    4. Baxter, William F, 1983. "Bank Interchange of Transactional Paper: Legal and Economic Perspectives," Journal of Law and Economics, University of Chicago Press, vol. 26(3), pages 541-588, October.
    5. Ausubel, Lawrence M, 1991. "The Failure of Competition in the Credit Card Market," American Economic Review, American Economic Association, vol. 81(1), pages 50-81, March.
    6. Hausman, Jerry A & Leonard, Gregory K & Tirole, Jean, 2003. " On Nonexclusive Membership in Competing Joint Ventures," RAND Journal of Economics, The RAND Corporation, vol. 34(1), pages 43-62, Spring.
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