Your Network or Mine ? The Economics of Routing Rules

  title={Your Network or Mine ? The Economics of Routing Rules},
  author={Benjamin E. Hermalin and Michael L. Katz},
In many markets, including payment cards and telecommunications, service providers operate networks that support customer transactions with each other. When the two sides of a transaction belong to more than one network in common, the question of which network will carry the transaction arises. We show that the answer depends on a combination of who has the formal authority to choose and the parties’ network subscription decisions. Our central finding is that granting formal authority to one… CONTINUE READING


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