A Study of the Interrelated Bilateral Transactions in Credit Card Networks

Sujit Chakravorti () and Alpa Shah
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Alpa Shah: J.P. Morgan

Law and Economics from EconWPA

Abstract: Over the last decade, consumers have tripled their use of credit cards as more merchants have increased their acceptance of them. This increase suggests that incentives in today's marketplace favor greater credit card use by consumers and acceptance by merchants. In this paper, we study the set of interrelated bilateral transactions in credit card networks. First, we survey the recent theoretical papers using this approach and find that there is a lack of consensus regarding the optimal set of pricing policies. Second, we explore each of these interrelated transactions emphasizing common market practices and the underlying regulatory and legal framework. Third, we analyze the impact of certain credit card market practices on competing payment instruments such as debit cards.

Keywords: credit cards; rents; antitrust; networks (search for similar items in EconPapers)
JEL-codes: K (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ent, nep-law and nep-net
Date: Written
Note: Type of Document - Word/pdf; prepared on IBM PC ; to print on HP/PostScript/Franciscan monk; pages: 38 ; figures: included/. This located at:
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Related works:
Working Paper: A study of the interrelated bilateral transactions in credit card networks (2001)
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Persistent link: http://EconPapers.repec.org/RePEc:wpa:wuwple:0111001

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