The European Commission’s Ruling in MasterCard: A Wise Decision?

This article is part of a Chronicle. See more from this Chronicle

Wilko Bolt, Apr 01, 2008

Payment pricing and competitive efficiency have recently attracted a lot controversy. This has led to some spectacular antitrust litigation in the United States, Australia and now Europe. Ultimately, the central issue concerns whether the specific circumstances of payment markets are such that public policy or antitrust intervention can be expected to improve economic welfare. To date, there is little consensus neither among policymakers nor economic theorists on what constitutes an efficient fee structure for card-based payments. Admittedly, appropriate pricing arrangements for payment instruments are a complex matter, since payment networks are subject to large economies of scale and give rise to strong usage and network externalities. These factors have likely resulted in significant concentration in the retail payments industry. Download the entire article available in the column on the left.

Links to Full Content