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

Santiago Carbó-Valverde (), José Liñares-Zegarra and Francisco Rodríguez-Fernández ()
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Santiago Carbó-Valverde: Department of Economic Theory and Economic History, University of Granada, http://www.ugr.es/local/scarbo
Francisco Rodríguez-Fernández: 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 () and Santiago Carbo Valverde

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)
Pages: 54 pages
Date: 2007-11-03
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Persistent link: https://EconPapers.repec.org/RePEc:gra:fegper:07/01

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