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A number of jurisdictions are considering imposing price caps on the interchange fees that card issuers receive from merchant acquirers when cardholders pay with their cards. Several have already done so. This paper examines the net impact of these price caps on consumers. The economics of...
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When firms' shrouding of charges, as in Gabaix and Laibson (2006), meets with consumers' salient thinking, as in … quality beyond what would be cost efficient. As more intense shopping leads to a greater “pass through” of shrouded charges … policy. While in our model all consumers are potential victims of salient thinking and shrouded charges, salient thinking …
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This paper examines regulator concerns that cash-paying consumers pay higher retail prices due to so-called ‘negative pricing' of credit cards that emerge when cardholders face few fees but instead receive discounts, rewards and other inducements for using credit cards for transactions. It is...
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