CEU Electronic Theses and Dissertations, 2013
| Author | Papp, Bertalan |
|---|---|
| Title | Is EU competition policy going to tip the Hungarian payment card market? Analysis of an asymmetric regulation of the interchange fee and the resulting policy challenge |
| Summary | The structure of the Hungarian payment card market became distorted by the commitment Visa has made in 2010, subsequent to a European Commission investigation into its interchange fee setting practices. As a result, restricted by a cap on its domestic debit fee, Visa is seemingly unable to compete with MasterCard in the issuing business. In response to the continuous loss of market share following the EC proceeding, Visa has recently proposed to leave the Hungarian market, thereby prospecting near perfect monopoly structure in the industry. The threat and the underlying tendency impose an important policy challenge on the national competition authority to decide whether the threat is credible and whether it is requisite to prevent the exit or any further concentration by adaptive regulation. In order to substantiate the regulatory intervention, the cost-benefit analysis of these scenarios need to be compared to the prospect of monopolistic structure either arising from Visa’s exit or the sequel of MasterCard’s expansion. In my thesis I explore and evaluate the available scenarios and argue that as opposed to the proposal of the Hungarian authorities, in particular the cap on domestic debit interchange fees, no such regulatory intervention is justified. The main reason is that no robust economic analysis has been provided to support the proposed level of reduction and neither the exit threat, nor the prospect of detrimental monopolization – in form of any abuse of dominance – is likely. In contrast, I show that the market distortion gave rise to important innovative developments and related reductions in interchange fees – two major goals that the authorities target, but the proposed regulation would hinder. |
| Supervisor | Gergely Csorba |
| Department | Economics MA |
| Full text | https://www.etd.ceu.edu/2013/papp_bertalan.pdf |
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