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The No Surcharge Rule and Merchant Competition

Listed author(s):
  • Frans Saxén

    ()

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    We analyze the no surcharge rule (NSR) and its impact on merchant competition by comparing different surcharging regimes. Any constraint on surcharging, including the NSR is shown to be a competition-softening device. A NSR may induce socially excessive card use. Allowing imperfectly competitive merchants to surcharge may lead to socially too little card use. Under a NSR, increased cost of card acceptance increases all prices, even the prices of a merchant not accepting cards. Under the NSR cards yielding no social surplus may be viable. This is not the case without the NSR. Card-use rewards may hurt consumers. Copyright Springer Science+Business Media New York 2014

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    File URL: http://hdl.handle.net/10.1007/s10842-013-0151-3
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    Article provided by Springer in its journal Journal of Industry, Competition and Trade.

    Volume (Year): 14 (2014)
    Issue (Month): 1 (March)
    Pages: 39-66

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    Handle: RePEc:kap:jincot:v:14:y:2014:i:1:p:39-66
    DOI: 10.1007/s10842-013-0151-3
    Contact details of provider: Web page: http://springer.com

    Order Information: Web: http://www.springer.com/economics/industrial+organization/journal/10842/PS2

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