Research On Price Structure In Bankcard Industry

Price structure is a bottleneck in the development of the bankcard industry. Research on price structure in the bankcard industry is of great value to current two-sided market research theoretically, and can help solve the monopoly price problem in practice. The difficulty of price structure research comes from unendogenetic indirect network externalities in this bankcard two-sided market. Through theoretic analysis, model innovation, antitheses and case study, this paper presents a systemic and feasible framework to study price structure in bankcard industry by integrating traditional multi-pricing theory with burgeoning two-sided market pricing theory.Within a monopoly platform to maximize its total profit, the main determinants of equilibrium price structure are (i) the relative size of demand-price elasticity, and (ii) the relative size of cross-group externality. And the expected intra-marginal utility is added when the purpose is to maximize the whole social welfare. To make these two price structure coincide, the variable utility of customers and merchants should hold the same distribution function.Within symmetrical duopoly market structure, the price structure is determined by (i) the relative size of demand-price elasticity, and (ii) the relative size of cross-group externality, and (iii) the customers' loyalty about certain platform, which makes the platform charge customers less and charge merchants more. And when the duopoly platforms are asymmetrical in customers' demand volume, platforms try to make money from their market power, in which price structure would lead to more merchants' resistance and less bankcard transaction.At last, on the basis of theoretic research, the case of merchants' resistance to ChinaUnionpay in Shenzhen is studied. By analyzing the incentive of merchants' resistance and the bankcard industry of China, the way to break through the price structure bottleneck is found: (i) improving the use condition, (ii) changing consumers' payment habit, and (iii) fractionizing the consumers and merchants.