INFORMATION AND PRICE DISPERSION: THEORY AND EVIDENCE

Limited information is the key element generating price dispersion in models of homogeneous-goods markets. We show that the global relationship between information and price dispersion is an inverse-U shape. We test this mechanism for the retail gasoline market using a new measure of information based on commuter data from Austria. Commuters sample gasoline prices on their commuting route, providing us with spatial variation in the share of informed consumers. Our empirical estimates are in line with the theoretical predictions. We also quantify how information affects average prices paid and the distribution of surplus in the gasoline market.     

Impact of interchange fees on a nonsaturated multi-agent payment card market

The impact that the level of interchange fees has on the payment adoption rate in a non-saturated market is investigated. This study is performed under different degrees of consumers' and merchants' awareness of the benefits arriving from the network externalities. In a four-party scheme, we model explicitly the interactions between consumers and merchants at the point of sale. The interchange fees flow from the acquirers to issuers. We allow card issuers to charge consumers with fixed fees and provide net benefits from card usage, whereas acquirers could charge fixed and transactional fees to the merchants. Merchant's transactional fees are determined proportionally to the level of interchange fees. We establish that, under this scheme, the two-sided nature of the market leads to higher adoption rates with lower interchange fees. Copyright © 2009 John Wiley & Sons, Ltd.     

Currents of Liquidity Flows Created by the Different Type of Payments: the Case of SPEI

In the present study we examine through network model and transactional analysis the structure of participants’ funds assigned to cover their own payments and payments initiated by their clients (third party) in the Mexican Real Time Payment system SPEI 2 2 SPEI is an hybrid system, equivalent to a Real Time Gross Settlement (RTGS)
. First we build two networks by splitting the number of transactions in two sets of operations, namely payments initiated by third parties and by participants. Our main finding in this regards is that both networks have a core-periphery structure and third party payments help to increase connectivity at the core. From the transactional analysis, we found that third party payments use 47% of the total amount of funds - an indication that participants have strong interest to settle third party payment on real time. Further, in the case of third parties’ payments the ratio of external funds vs. funds formed with incoming payments, is 15%-85%, whereas for transactions initiated by participants this ratio is 19%-81%. This finding is an evidence that with third party payments banks are able to increase the overall level of recycling in the system. Copyright © 2015 John Wiley & Sons, Ltd.