Working Paper
A Note on Partial Merchant Internalization and MIT Threshold
Vilen Lipatov
CESifo, Munich, 2015
CESifo Working Paper No. 5684
CESifo, Munich, 2015
CESifo Working Paper No. 5684
![](https://cesifo.org/DocImg/cesifo1_wp5684.jpg?c=1689237133)
In framework of Rochet and Tirole (2011), I allow for partial merchant internalization and study how MIT threshold is related to levels of inter-change fee that maximize various components of social welfare. I find that cost absorption on the side of issuers and merchant heterogeneity each bias MIT threshold upward from TUS maximizing level.
CESifo Category
Industrial Organisation
Industrial Organisation
Keywords: MIT, merchant internalization, payment cards, two-sided markets
JEL Classification: E420, G280, K210, L490