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Contribution Details
Type | Journal Article |
Scope | Discipline-based scholarship |
Title | Credit card interchange fees |
Organization Unit | |
Authors |
|
Item Subtype | Original Work |
Refereed | Yes |
Status | Published in final form |
Language |
|
Journal Title | Journal of Banking and Finance |
Publisher | Elsevier |
Geographical Reach | international |
ISSN | 0378-4266 |
Volume | 34 |
Number | 8 |
Page Range | 1788 - 1797 |
Date | 2010 |
Abstract Text | We build a model of credit card pricing that explicitly takes into account credit functionality. In the model a monopoly card network always selects an interchange fee that exceeds the level that maximizes consumer surplus. If regulators only care about consumer surplus, a conservative regulatory approach is to cap interchange fees based on retailers’ net avoided costs from not having to provide credit themselves. This always raises consumer surplus compared to the unregulated outcome, sometimes to the point of maximizing consumer surplus. |
Digital Object Identifier | 10.1016/j.jbankfin.2010.02.026 |
Other Identification Number | merlin-id:447 |
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