Payment Card Network Pricing - A Theoretical Approach Analyzing the Relationship between Downstream Market Characteristics and the Merchant Usage Fee
In this thesis the model of a payment card network is constructed to explore the impact of downstream market characteristics (i.e., the market where merchants and consumers interact) on the merchant and the interchange fee, thereby extending the literature’s observations of payment systems. To accomplish this, three scenarios are analyzed: firstly, a unitary payment card network with merchants under Cournot quantity competition and, secondly, under Bertrand price competition respectively, as well as, thirdly, a multi-party payment card network with merchants under Cournot quantity competition. This study yields two significant results. Firstly, the merchant and the interchange fee are found decreasing in the consumer price elasticity, the level of product substitutability and the relative frequency of card usage. Secondly, regulating the interchange fee and the merchant fee respectively is found particularly useful since, in markets with less competition where consumers already face inefficiently high prices, the payment card fees will also tend to be higher.
|This book is provided by ZBW - German National Library of Economics in its series EconStor Theses with number 44593 and published in 2011.|
|Contact details of provider:|| Postal: Düsternbrooker Weg 120, 24105 Kiel / Neuer Jungfernstieg 21, 20354 Hamburg|
Phone: +49 431 8814-1
Fax: +49 431 8814-520
Web page: http://www.econstor.eu/
More information through EDIRC
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.:
- Wilko Bolt & Sujit Chakravorti, 2008.
"Economics of payment cards: a status report,"
Federal Reserve Bank of Chicago, issue Q IV, pages 15-27.
- David Evans & Richard Schmalensee, 2007.
"The Industrial Organization of Markets with Two-Sided Platforms,"
Competition Policy International, vol. 3.
- David S. Evans & Richard Schmalensee, 2005. "The Industrial Organization of Markets with Two-Sided Platforms," NBER Working Papers 11603, National Bureau of Economic Research, Inc.
When requesting a correction, please mention this item's handle: RePEc:zbw:esthes:44593. 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: (ZBW - German National Library of Economics)
If references are entirely missing, you can add them using this form.