We compare monopoly profit, consumer surplus, and total welfare associated with three commonly-used tying strategies: no tying, pure tying, and mixed tying. Whereas previous literature focused mainly on profit comparisons, this paper evaluates the relationship between component production costs...

In October 2011, new rules governing debit card interchange fees became effective in the United States. These rules limit the maximum permissible interchange fee that an issuer can charge merchants for a debit card transaction. This paper provides simple calculations that identify the...

Merchant fees and reward programs generate an implicit monetary transfer to credit card users from non-card (or "cash") users because merchants generally do not set differential prices for card users to recoup the costs of fees and rewards. On average, each cash-using household pays $149 to...