Nonbanks in the Payments System: Vertical Integration Issues
We discuss and evaluate the incentives for vertical expansion and vertical mergers in the payments systems industry paying particular attention to the implications of the existence of network effects in this industry. We assess the incentives of large merchants to extend vertically into payments systems, noting that this incentive is maximized when there is significant market power in payments systems and merchants are not sufficiently compensated for the business they bring to the network.
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05-01, New York University, Leonard N. Stern School of Business, Department of Economics.
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New York University, Leonard N. Stern School Finance Department Working Paper Seires
01-00, New York University, Leonard N. Stern School of Business-.
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- Terri Bradford & Matt Davies & Stuart E. Weiner, 2002. "Nonbanks in the payments system," Payments System Research Working Paper PSR WP 02-02, Federal Reserve Bank of Kansas City.
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