The mixed oligopoly of cross-border payment systems

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Title: The mixed oligopoly of cross-border payment systems
ISBN: 952-462-212-2
Author: Kauko, Karlo
Organization: Suomen Pankki
Department / Unit: Monetary Policy and Research Department
Series: Bank of Finland Research Discussion Papers
ISSN: 1456-6184
Series year: 2005
Series number: 11/2005
Year of publication: 2005
Publication date: 5.4.2005
Published in: Published in International Research Journal of Finance and Economics, Issue 24, February 2009: 153-166
Pages: 31 s.
Keywords: kilpailu; euroalue; maksujärjestelmät; oligopoli; kansainvälinen; maksut; mallit; clearing/settlement; hinnoittelu; keskuspankit; Target; EURO1;
JEL: L13; L44; F36; G29
Abstract: This paper presents a model depicting cross-border payment systems as a mixed oligopoly.A private net settlement system that maximises profit competes with the central banks' gross settlement system that maximises welfare.It may be optimal for the central bank system to encourage increased use of the private system by charging fees that exceed the marginal cost.The central bank system is not only a competitor but also an essential service provider, because central bank money is needed for net settlement of payments in the private system.In some cases the central bank system can paradoxically induce the private system to charge lower fees by making it expensive to use central bank money for settlement purposes. Key words: payment systems, network economics, mixed oligopolies JEL Classification numbers: L13, L44, F36, G29
Note: Ilmestynyt myös International research journal of finance and economics 2009 ; 24.

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