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| Author: | Masters, A. Rodriguez-Reyes, L.R. |
| Title: | Endogenous credit-card acceptance in a model of precautionary demand for money |
| Journal: | Oxford Economic Papers
2005 : JAN, VOL. 57:1, p. 157-168 |
| Index terms: | Retailing Credit cards Money demand Models |
| Language: | eng |
| Abstract: | A credit-card (henceforth as: c-c. / c-cs.) acceptance decision by retailers is embedded into a simple model of precautionary demand for money. The model gives a new explanation for how the use of c-cs. can differ so widely across countries. RetailersÂ’ propensity to accept c-cs. reduces the need for buyers to hold cash as the chance of a stock-out (of cash) is reduced. When retailers make their decision with respect to c-c. acceptance they do not take into account the effect that decision has on other sellers. This externality generates multiple equilibria over portions of the parameter space. |
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