Working Paper
A Note on Partial Merchant Internalization and MIT Threshold
Vilen Lipatov
CESifo, Munich, 2015
CESifo Working Paper No. 5684
CESifo, Munich, 2015
CESifo Working Paper No. 5684
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 MIT threshold upward from TUS maximizing level.
CESifo Category
Industrial Organisation
Industrial Organisation
Keywords: MIT, merchant internalization, payment cards, two-sided markets
JEL Classification: E420, G280, K210, L490