Abstract

http://ssrn.com/abstract=1013225
 
 

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Nonbanks in the Payments System: Vertical Integration Issues


Nicholas Economides


New York University - Leonard N. Stern School of Business - Department of Economics

August 2007

NET Institute Working Paper No. 07-06
NYU Law and Economics Research Paper No. 07-32
NYU Working Paper No. EC-07-23

Abstract:     
We discuss and evaluate the incentives for vertical expansion and vertical mergers in the payments systems industry paying particular attention to the implications of the existence of network effects in this industry. We assess the incentives of large merchants to extend vertically into payments systems, noting that this incentive is maximized when there is significant market power in payments systems and merchants are not sufficiently compensated for the business they bring to the network.

Number of Pages in PDF File: 23

Keywords: payments system, credit cards, debit cards, non-banks, vertical integration, market power, monopoly

JEL Classification: L13, L42, L50, L80

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Date posted: September 10, 2007  

Suggested Citation

Economides, Nicholas, Nonbanks in the Payments System: Vertical Integration Issues (August 2007). NET Institute Working Paper No. 07-06; NYU Law and Economics Research Paper No. 07-32; NYU Working Paper No. EC-07-23. Available at SSRN: http://ssrn.com/abstract=1013225 or http://dx.doi.org/10.2139/ssrn.1013225

Contact Information

Nicholas Economides (Contact Author)
New York University - Leonard N. Stern School of Business - Department of Economics
44 West 4th Street
New York, NY 10012
United States
212-998-0864 (Phone)
212-995-4218 (Fax)
HOME PAGE: http://www.stern.nyu.edu/networks/
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