The Merchants’ Insincere Concern About Cross-Consumer Subsidies
In my first post I argued that consumers as a group would likely be made worse off as a result of artificially imposed reductions in interchange fees. This post considers a second line of attack—that even if consumers overall would be made no better off (or even worse off) as a result of regulating interchange ... The Merchants’ Insincere Concern About Cross-Consumer Subsidies
Debunking the "Cross-Subsidy" Theory
(NB: We have consulted with Visa U.S.A. Inc. on a variety of issues; the views expressed herein are our own.) In our earlier post, we observed that the GAO report on interchange got off on the wrong foot when it concluded that interchange fees were rising. We infer from the silence which greeted our post ... Debunking the "Cross-Subsidy" Theory
Welcome to Day Two
The Law and Economics of Interchange Fees and Credit Card Markets Welcome to day two of of our two-day symposium on the law and economics of interchange fees and credit cards. Our symposium brings together several of the world’s leading experts on interchange fees and the law and economics of credit card markets. Our participants ... Welcome to Day Two
Onions Forever! A Response to Allan Shampine
There is nothing like the provocative post from Allan Shampine to move this debate up a notch. First, I did not say that the debate over interchange fees was Onionesque. I reserved that dubious distinction to the on-the-hand-on-the-other-hand title of the GAO report. Allan is right that the stakes are huge, which is why this ... Onions Forever! A Response to Allan Shampine
Interchange Legislation as Counterproductive Consumer Protection Regulation
Joshua D. Wright is Assistant Professor of Law and George Mason University School of Law. I want to begin with the premise that the legislation pending in Congress, in whatever form is ultimately adopted, will be successful in reducing interchange fees before turning to the question of whether such a reduction can be justified. Proponents ... Interchange Legislation as Counterproductive Consumer Protection Regulation
The Myth of Consumer Protection Through Disclosure
Omri Ben-Shahar is the Frank and Bernice J. Greenberg Professor of Law at the University of Chicago. I will focus my blog post on one of the proposals for reducing interchange fees: the requirement that the fees be disclosed to consumers. I am not sure how seriously this option is taken by the GAO report. ... The Myth of Consumer Protection Through Disclosure
Regulating Interchange Fees will Promote Term Repricing that will be Harmful to Consumers and Competition
Todd J. Zywicki is Foundation Professor of Law at George Mason University School of Law. Although the mechanisms vary, legislation pending before Congress on interchange has a basic central purpose—to reduce interchange fees, either indirectly or directly. If adopted, these efforts will likely succeed in their intended goal of reducing interchange fees. But they will ... Regulating Interchange Fees will Promote Term Repricing that will be Harmful to Consumers and Competition
What happened in Australia?
Joshua Gans is the foundation Professor of Management (Information Economics) at the Melbourne Business School, University of Melbourne. What happens when you take a key price in an industry and cut it in half? For normal markets economists would expect that this would have a dramatic effect on quantity. That, however, was not the experience ... What happened in Australia?
The Economics of Payment Cards: Six Lessons from the Literature
Sujit ‘Bob’ Chakravorti is a senior economist in the financial markets group at the Federal Reserve Bank of Chicago. Disclaimer: These views are my own and not those of the Federal Reserve Bank of Chicago or the Federal Reserve System. Much of this discussion is taken from my paper titled “Externalities in Payment Card Networks: ... The Economics of Payment Cards: Six Lessons from the Literature
Interchange Fees Are Not Rising: Correcting the GAO Report
Thomas Brown is a partner in O’Melveny and Myers’ San Francisco office. Timothy J. Muris is Foundation Professor of Law at George Mason University School of Law and Of Counsel in O’Melveny & Myers’ Washington DC office. Next summer, the World Cup, the world’s most watched sporting event, marks its quadrennial return. Although thirty-two teams ... Interchange Fees Are Not Rising: Correcting the GAO Report
Credit Cards in Context: Framing the Discussion
Allan L. Shampine is a Vice President at Compass Lexecon in Chicago While the GAO report provides a useful summary of many of the issues being debated within the credit card community, the GAO’s mandate was, in some ways, rather narrow. The GAO was asked to “review (1) how the fees merchants pay have changed ... Credit Cards in Context: Framing the Discussion
Seven Truths About Regulating Interchange
Robert Stillman is a Vice President in the European Competition Practice of Charles River Associates Interchange fees on payment cards are obviously a hot topic in the United States, but also in Europe and in many other countries around the world. The report on interchange fees released last month by the US Government Accounting Office ... Seven Truths About Regulating Interchange
