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In framework of Rochet and Tirole (2011), I allow for partial merchant internalization and study how MIT threshold is related to levels of inter-change fee that maximize various components of social welfare. I find that cost absorption on the side of issuers and merchant heterogeneity each bias...
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payment networks, and to assess the way this affects competition and equilibrium fees. We analyze a situation in which … depend on funding costs or default risk in a debit-card only world, this changes when they start to compete with credit cards … acceptance at the margin. - Payment pricing ; Card competition ; Consumer credit ; Complementarity …
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This paper investigates how buyers allocate their spending among debit, credit, and prepaid cards. Using the 2012 Diary of Consumer Payment Choice, I show that consumers tend to concentrate the majority of their transactions and a large value of their transactions on a single type of card. The...
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