The provision of retail payment services is complex with many participants engaging in a series of interrelated bilateral transactions and subject to large economies of scale and scope along with strong adoption, usage and network externalities. This makes sound public policy difficult. We focus on three types of market interventions...
Bolt and Chakravorti discuss different types of market interventions by public authorities in retail payment markets. They concentrate on three types of market interventions. First, they analyze the impact of removing pricing restrictions placed on merchants that prevent them from setting different prices based on the payment instrument used to...
The key questions that Chakravorti asks in this book chapter are: (1) How is the payment system evolving? (2) What are the economic forces driving the adoption of new payment instruments? (3) Would recent developments in the payment system limit the central bank from conducting monetary policy? He argues that...
Chakravorti and Roson construct a model to study competing payment networks, where networks offer differentiated products in terms of benefits to consumers and merchants. We study market equilibria for a variety of market structures: duopolistic competition and cartel, symmetric and asymmetric networks, and alternative assumptions about consumer preferences. We find...
Chakravorti investigates payments system reforms begun by the Bank of Mexico in 1994. The goals of these reforms are to reduce the amount of uncollateralized intraday credit extended by the Bank of Mexico (previously unlimited), to promote a market-based allocation of intraday credit for interbank payments, and to move large-value...