Please use this identifier to cite or link to this item: https://doi.org/10.2202/1446-9022.1221
Title: Why do merchants accept payment cards?
Authors: Wright, J. 
Keywords: credit cards
debit cards
payment
Issue Date: 29-Aug-2010
Citation: Wright, J. (2010-08-29). Why do merchants accept payment cards?. Review of Network Economics 9 (3) : -. ScholarBank@NUS Repository. https://doi.org/10.2202/1446-9022.1221
Abstract: This short article explains why merchants accept expensive payment cards when merchants are Cournot competitors. The same acceptance rule as the Hotelling price competition model of Rochet and Tirole (2002) is derived. Unlike the models used in the existing literature, in the Cournot setting without free entry of merchants, payment card acceptance expands merchant output and increases merchant profit in equilibrium. With free entry, payment card acceptance increases the number of merchants in the industry and industry output. © 2010 Berkeley Electronic Press. All rights reserved.
Source Title: Review of Network Economics
URI: http://scholarbank.nus.edu.sg/handle/10635/124299
ISSN: 14469022
DOI: 10.2202/1446-9022.1221
Appears in Collections:Staff Publications

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