The Role of Merchants' Pass-Through in Payment Platform Markets

47 Pages Posted: 10 Dec 2014 Last revised: 12 Jan 2016

See all articles by Carlotta Mariotto

Carlotta Mariotto

European Commission DG COMP - Chief Economist Team

Marianne Verdier

Université Paris 2 Panthéon Assas

Date Written: January 12, 2016

Abstract

In this article, we analyze a general model of a payment card platform. We relax the standard assumption of the literature that the product market is covered. We show that the difference between the privately set structure of payment card fees and the socially optimal one depends both on banks' and merchants' pass-through of their costs to consumers.

Keywords: Interchange fees, Payment Systems, Two-Sided Markets

JEL Classification: E42, L1, O33

Suggested Citation

Mariotto, Carlotta and Verdier, Marianne, The Role of Merchants' Pass-Through in Payment Platform Markets (January 12, 2016). Available at SSRN: https://ssrn.com/abstract=2535558 or http://dx.doi.org/10.2139/ssrn.2535558

Carlotta Mariotto

European Commission DG COMP - Chief Economist Team ( email )

1210 Sint-Joost-ten-Noode
Bruxelles, 1000
Belgium
0032493961759 (Phone)

Marianne Verdier (Contact Author)

Université Paris 2 Panthéon Assas ( email )

France

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