Maison de la paix, room 601
The Brown Bag Lunch is a weekly event organized by International Economics where faculty members present their ongoing research.
This week's speaker is Jose Aurazo, Central Reserve Bank of Peru, giving a talk entitled
Merchant acceptance of means of payment: An application of the tourist test to Peru (co-authored with Jose Vasquez)
Abstract: Rochet and Tirole (2011) proposed a model named as “tourist test” or “merchant indifference test” that determines the maximum merchant discount and interchange fee that merchants would pay whenever they accept cards instead of cash. We incorporate to this model some peculiarities of the Peruvian case. First, we assume that the government supplies cash in the economy and second, it also sets a tax rate for all transactions but only a proportion of these are declared by merchants and thus pay taxes. With this new setting, the maximum interchange fee that merchants would pay now internalizes the net tax cost of cards meanwhile the interchange fee that maximizes social welfare takes into account the cost of supplying cash for the government. To contrast empirically the model, we use data on private cost of several means of payments for small and medium businesses from a survey conducted by the Central Reserve Bank of Peru in May and June 2019.
The Brown Bag Lunch is a weekly series where professors and doctoral students present their ongoing research. For more details please contact Xiaojing Zhou.