Abstract

http://ssrn.com/abstract=1845391
 
 

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Perfect Surcharging and the Tourist Test Interchange Fee


Hans Zenger


Charles River Associates (CRA)

February 14, 2011

Journal of Banking and Finance, Vol. 35, No. 10, pp. 2544-2546, 2011

Abstract:     
Two widely discussed pricing benchmarks in the literature on payment cards markets are the "tourist test" interchange fee (Rochet and Tirole, 2011), which internalizes usage externalities in payment card markets, and "perfect surcharging" by merchants (Rochet and Tirole, 2002). This paper shows that these benchmarks are allocatively equivalent. Implications for the regulatory treatment of interchange fees and no-surcharge rules are discussed.

Number of Pages in PDF File: 10

Keywords: Perfect surcharging, tourist test, interchange fee, payment cards, payment cards markets

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Date posted: May 26, 2011 ; Last revised: August 2, 2011

Suggested Citation

Zenger, Hans, Perfect Surcharging and the Tourist Test Interchange Fee (February 14, 2011). Journal of Banking and Finance, Vol. 35, No. 10, pp. 2544-2546, 2011. Available at SSRN: http://ssrn.com/abstract=1845391

Contact Information

Hans Zenger (Contact Author)
Charles River Associates (CRA) ( email )
Avenue Louise 81
Brussels, 1050
Belgium
HOME PAGE: http://works.bepress.com/hans_zenger/
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