Payment Platforms and Pricing: When Does a 'One Price Rule' Help Consumers?

26 Pages Posted: 14 Jan 2019

See all articles by Chang Liu

Chang Liu

Harvard University, Department of Economics, Students

Fengshi Niu

University of California, Berkeley, Department of Economics, Students

Alexander White

Tsinghua University - School of Economics & Management

Date Written: January 10, 2019

Abstract

Should a payment intermediary (e.g. American Express, PayPal, etc.) be allowed to require merchants to charge the same price for customers who pay via the platform as they charge other customers? We build a model that highlights certain under-appreciated aspects of this questions. Taking these into account, we find that such platform-imposed requirements may benefit consumers in ways that recent work on the topic has overlooked. A central aspect of our approach is to draw connections between this question, as it relates to payment platforms, and recent, more abstract work on third-degree price discrimination.

Keywords: Platforms, Payment Intermediaries, Electronic Payments, Price Coherence, Third-Degree Price Discrimination, Demand Curvature

Suggested Citation

Liu, Chang and Niu, Fengshi and White, Alexander, Payment Platforms and Pricing: When Does a 'One Price Rule' Help Consumers? (January 10, 2019). Available at SSRN: https://ssrn.com/abstract=3313895 or http://dx.doi.org/10.2139/ssrn.3313895

Chang Liu

Harvard University, Department of Economics, Students ( email )

Cambridge, MA
United States

Fengshi Niu

University of California, Berkeley, Department of Economics, Students ( email )

CA
United States

Alexander White (Contact Author)

Tsinghua University - School of Economics & Management ( email )

Mailbox A-44
Weilun Building
Beijing, 100084
China

HOME PAGE: http://alex-white.net

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