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Abstract

Market Definition and Market Power in Payment Card Networks

The Review of Network Economics

Vol. 5, Issue 1 - March 2006, pp 45 - 60



Author
  Eric Emch
U.S. Department of Justice

T. Scott Thompson
Bates White, LLC

E-mail: [email protected]

Abstract
  We discuss competition among payment card networks, and in particular how antitrust practitioners might approach questions of market definition and market power in these markets. Application of the hypothetical monopolist test to define markets, and the use of traditional metrics to measure market power, may be less straightforward for card networks than for many markets. The "two-sidedness" of the market does not, however, overturn the basic logic of the hypothetical monopolist test or traditional measurements of market power. We demonstrate some practical ways to apply these antitrust principles to competition among payment card networks.

Keywords: Payment card networks, market definition, market power, SSNIP test

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