Decided To Analyze The Credit Card Market Prices Under The Conditions Of Asymmetric Information

In the last few years, the credit card market in China develops quickly, and thecompetition within it becomes more and more fierce. While, the credit card crisis inKorea and Taiwan reminds us a prudential attitude should be paid to cope with theemerging market. This paper begins with the operation mechanism in the credit cardmarket as well as the positioning of the participating parties in the market. Combiningwith information asymmetry theories, the paper discusses the information asymmetryphenomenon in the market. And because of the Law of Large Numbers, together withits own characteristics, the market reveals a high clarity of information. Then,combined with models, the paper analyzes the market participants' determiningprocess of the overdue interest rate and the allowed-overdue-amount in the followingthree aspects, the profit maximizing pricing model, cost-oriented pricing model, aswell as the consumer behavior. The paper calculates the best overdue interest rate andits related allowed-overdue-amount with the profit maximizing model. At the end ofthe paper, it points out that, for the sake of the healthy development in the credit cardmarket, the prices of the credit card should be determined by the market.