MARKET POWER AND WILLINGNESS TO PAY IN NETWORK INDUSTRIES: EVIDENCE FROM PAYMENT CARDS WITHIN MULTIPRODUCT BANKING

Santiago Carbo (), José Manuel Liñares-Zegarra () and Rodríguez-Fernández, Francisco ()
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Rodríguez-Fernández, Francisco: Department of Economic Theory and Economic History, University of Granada, http://www.ugr.es/local/franrod
Authors registered in the RePEc Author Service: Francisco Rodríguez Fernández ()

No 07/01, FEG Working Paper Series from Faculty of Economics and Business (University of Granada)

Abstract: Theoretical contributions on network industries have been numerous. However, there is a lack of sufficient empirical evidence which would assist related policymaking. This is the case of payment cards markets. This paper employs a unique database to analyze changes in market power and consumers' willingness to pay resulting from the introduction of payment cards in a multiproduct banking technology. Our findings indicate that any rise in bank market power from payment cards is associated to a greater increase in consumers' willingness to pay. Any antitrust intervention which does not take into account such welfare effects could be misguided.

Keywords: Card payments; bank market power; willingness to pay; multiproduct technology; network industries. (search for similar items in EconPapers)
JEL-codes: D12 D21 G21 (search for similar items in EconPapers)
Date: 2007-11-03
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