Market Structure and Information in Payment Card Markets

This paper investigates the market structure of the payment card market with consumers and merchants basing their subscription decisions on various information sets. We find that the market structure depends crucially on this information set, where we observe that a market with few cards dominating only emerges when decisions are based on very limited information. For more complete information sets, more and more cards survive in the long run. The use of an agent-based model focussing on the interactions between merchants and consumers as a basis for subscription decisions allows us to investigate the dynamics of the market rather than investigating only equilibrium outcomes.