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Stossel Returns

An announcement from John Stossel: It’s finally here – my new Fox Business show!  Fox fittingly has titled it, Stossel.  It premieres Thursday at 8 p.m.  It will repeat Fridays at 10 p.m., where I’ll be up against my old program, 20/20. FBN has given me an opportunity to do 44 TV shows on what ... Stossel Returns

Searle Center Preliminary Report on State Consumer Protection Acts

The Searle Center Civil Justice Institute has announced the release of its preliminary report on State Consumer Protection Acts: An Empirical Investigation of Private Litigation.   You can read the Executive Summary here.  As the Searle Center State Consumer Protection Acts Task Force Chair, I’ve been involved in the data collection, analysis, and drafting of this ... Searle Center Preliminary Report on State Consumer Protection Acts

Robert Rhee on Nationalization in a Time of Crisis

I have spent the better part of the year studying the consequences of government ownership in the private sector, see Treasury Inc.: How the Bailout Reshapes Corporate Theory and Practice.  I recently had the opportunity to read a new paper from Robert Rhee that examines the issue from a different point of view, Nationalization of ... Robert Rhee on Nationalization in a Time of Crisis

Informational Cascades, Reputational Cascades, Group Polarization, and the Climate Emails

It’s been interesting to observe the responses to the hacked emails from the Climate Research Unit at the University of East Anglia. The emails seem to show leading global warming scientists massaging data to generate the result they prefer (i.e., “I’ve just completed Mike’s Nature trick of adding in the real temps to each series ... Informational Cascades, Reputational Cascades, Group Polarization, and the Climate Emails

Symposium Wrap Up

Thanks to all of our participants and readers for the blog symposium–both the posts and the comments were engaging and thoughtful, and I hope these entries will be helpful in the ongoing debate over credit cards and interchange fees. A concluding point or two: Credit card networks are incredibly complex, and no one fully understands ... Symposium Wrap Up

The Institutional Dynamic: Understand First, Act Secondโ€”If At All

I have now had a chance to review the excellent posts on the second day, all of which have a common flavor.  They expand the universe of relative considerations that need to be taken into account to decide whether imposing caps on interchange fees enhances or reduces overall social welfare.  The narrow perspective on this ... The Institutional Dynamic: Understand First, Act Secondโ€”If At All

Merchant Collusion as an Antitrust Remedy

In my first post I discussed the potential for interchange legislation from a consumer protection perspective, that is, would the combination of disclosure requirements coupled with a reduction of interchange fees be likely to improve consumer welfare.   I concluded that from the consumer protection perspective, the case for interchange legislation was weak.  I noted that ... Merchant Collusion as an Antitrust Remedy

Competitive Payments

Most of the discussion related to pricing at the point of sale has emphasized the “cross-subsidy” between those that pay with cash and checks and those that pay with credit cards.  This discussion misses the core of the problem in a market where the use of cash and checks is rapidly declining; the central problem ... Competitive Payments

The Fee Neutrality Claim

Will reduction in interchange fees help or hurt consumers? Two posts yesterday made the conjecture that a reduction in one category of fees would only increase other fees, and that the overall sum of fees will not change. This is the fee-neutrality claim. Todd Zywicki writes: The mathematics of the situation is inescapable: card issuers ... The Fee Neutrality Claim

Allocating the Costs of Fraud

Geoffrey A. Manne is Executive Director of the International Center for Law & Economics and a Lecturer in Law at Lewis & Clark Law School. I take to heart Jim’s claim that fraud is too-little discussed in this realm given its cost, and thus I’ll try my hand at it. Every discussion of the industrial ... Allocating the Costs of Fraud

Assessing the Social Effects of the Use of Credit Cards

The GAO has a fairly extensive discussion of the costs and benefits of credit cards to merchants.  However, that discussion focuses on the individual benefits.  I would like to step back and put two of those benefits – increased merchant sales and fraud prevention costs – into the larger context that I discussed earlier. First, ... Assessing the Social Effects of the Use of Credit Cards

The Cost of Payments Interchange: Issues No One Talks About

I feel that at least two important issues are being left out of the raging controversy over the cost of interchange. (At this point my readers are probably deciding if I’ll follow with a pro-merchant or pro-bank POV…but guess what: here comes one of each to make my point that we’re being a bit simplistic ... The Cost of Payments Interchange: Issues No One Talks About