Economies of Scale in the Payment Card Market in Chile

Gonzalo Escobar Elexpuru and Ivan Valdes De la Fuente

International Journal of Economics & Business Administration (IJEBA), 2021, vol. IX, issue 2, 67-81

Abstract: Purpose: In recent years, the growth of credit and debit card transactions has increased significantly in quantity and volume. This work examines the existence of economies of scale in transaction processing, in a market with a vertically integrated. Design/Methodology/Approach: it was constructed an econometric model to measure whether there are economies of scale in the commercial transactions with credit and debit cards. A data Panel technique was used to run the model. Findings: The existence of a monopoly is not in itself a problem per se, what does create competition problems is the structure of that firm. After estimating the panel's data model indirectly from a cost function, this work determines the existence of economies of scale in the industry. Practical Implications: The model shows the existence of economies of scale in transaction processing after the entry of new actors in all segments of the industry, which increases the competition in the market. Originality/Value: This research contributes to the literature by estimating economies of scale in the payment card trading processing market in a two-sided market, which implies lower costs to make transaction with these cards and induces the entry of new actors to compete in a fringe of competitive firms.

Keywords: Economies of scale; two – sided markets; vertical integration. (search for similar items in EconPapers)
JEL-codes: L42 L59 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://www.ijeba.com/journal/689/download (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ers:ijebaa:v:ix:y:2021:i:2:p:67-81

Access Statistics for this article

More articles in International Journal of Economics & Business Administration (IJEBA) from International Journal of Economics & Business Administration (IJEBA)
Bibliographic data for series maintained by Marios Agiomavritis ().