2024-03-29T10:47:41Z
https://nagoya.repo.nii.ac.jp/oai
oai:nagoya.repo.nii.ac.jp:00028523
2023-01-16T04:03:42Z
1076:1077:1078
Do Premium Payment Methods Increase Effective Retail Prices?
Adachi, Takanori
93557
Tremblay, Mark J.
93558
Payment methods
credit cards
online shopping
merchant fees
consumer rewards
Ohio v.s. American Express
conduct parameter
2019-09
In this study we develop a tractable, yet general, framework to explain whether premium payment methods that impose no-surcharge rules are beneficial. This question is fundamentally related to policy and we provide a robust answer by considering how a variety of market structures are impacted by multiple payment methods. We find that the no-surcharge rule, which suggests uniform pricing to consumers, results in consumers paying different effective prices depending on their payment method. Instead, surcharging, which gives the impression of price discrimination, actually results in consumers paying the same effective price across payment methods. Most importantly, we also show that all consumers and all merchants earn greater surplus when surcharging is allowed. Furthermore, our results are robust across market structures suggesting that protected premium payment methods are generally harmful except for the credit card industry.
Adachi acknowledges a Fund for the Promotion of Joint International Research (16KK0054) and a Grant-in-Aid for Scientific Research (C) (18K01567) from the Japan Society for the Promotion of Science.
departmental bulletin paper
名古屋大学大学院経済学研究科附属国際経済政策研究センター
2019-09
Economic Research Center Discussion Paper
E19-12
1
19
eng
E-Series;E19-12