“A Primer on Payment Cards”, Jean-Charles Rochet & Jean Tirole, Relatório preparado para a Autoridade da Concorrência

The purpose of this report is to survey the recent academic literature on the economics of payment cards, stressing the indirect externalities inherent to this industry (and other “two-sided markets”)...

​The purpose of this report is to survey the recent academic literature on the economics of payment cards, stressing the indirect externalities inherent to this industry (and other “two-sided markets”), and providing guidelines for potential regulatory and antitrust interventions.

After an introduction (Section 1), Section 2 explains the indirect externalities involved in the payment card industry; Section 3 provides a model of the payment card industry; Section 4 uses this model to analyze the determinants of interchange fees and merchant fees; Section 5 discusses the robustness of the conclusions of the benchmark model to changes in the assumptions; Section 6 discusses regulatory and competition issues; Section 7 looks at the implications of duality; Section 8 examines foreclosure and tie-ins, with a particular attention to the case of tie-ins of debit and credit cards; and Section 9 concludes, providing preliminary answers to specific questions posed by the Portuguese Competition Authority.