Credit Card Pricing: The CARD Act and Beyond

Bar‐Gill, Oren; Bubb, Ryan

doi:10.2139/ssrn.1985948

Cited by 26 publications

(22 citation statements)

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“…Between 2000 and 2014, credit unions provided on average 7.4% as much revolving credit as commercial banks. 17 Consistent with the findings in Bar-Gill and Bubb (2011) andKaufman (2013), credit unions charge lower average interest rates than commercial banks: During the sample period, commercial banks charged an average interest rate of 13.06% on their credit cards, 18 and credit unions charged an average of 11.15%. 19 Of course, credit unions may react differently to changes in third-party debt collection laws than other lenders such as commercial banks.…”

Section: Variables and Sample Constructionsupporting

confidence: 60%

Debt Collection Agencies and the Supply of Consumer Credit

Fedaseyeu

2020

Working Paper (Federal Reserve Bank of Philadelphia)

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This paper finds that stricter laws regulating third-party debt collection reduce the number of third-party debt collectors, lower the recovery rates on delinquent credit card loans, and lead to a modest decrease in the openings of new revolving lines of credit. Further, stricter third-party debt collection laws are associated with fewer consumer lawsuits against third-party debt collectors but not with a reduction in the overall number of consumer complaints. Overall, stricter third-party debt collection laws appear to restrict access to new revolving credit but have an ambiguous effect on the nonpecuniary costs that the debt collection process imposes on borrowers.

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Section: Variables and Sample Constructionsupporting

confidence: 60%

Debt Collection Agencies and the Supply of Consumer Credit

Fedaseyeu

2020

Working Paper (Federal Reserve Bank of Philadelphia)

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“…The important exceptions are DellaVigna and Malmendier (2004), Heidhues and Koszegi (2010), Bar-Gill and Bubb (2012), Agarwal et al (2013) and Armstrong and Vickers (2012). DellaVigna and Malmendier (2004) and Heidhues and Koszegi (2010) demonstrate the potential welfare benefits of price regulation for a specific type of misperception, naiveté about time preferences, which is related to the utility misperception studied here.…”

Section: Introductionmentioning

confidence: 74%

“…DellaVigna and Malmendier (2004) and Heidhues and Koszegi (2010) demonstrate the potential welfare benefits of price regulation for a specific type of misperception, naiveté about time preferences, which is related to the utility misperception studied here. Bar-Gill and Bubb (2012) and Agarwal et al (2013) focus on a different misperception -price underestimation. The model in Armstrong and Vickers (2012) appears to cover both utility and price misperception, but in a way that masks the differences between the two types of misperception.…”

Section: Introductionmentioning

confidence: 99%

Price Caps in Multiprice Markets

Bar‐Gill¹

2015

The Journal of Legal Studies

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Many consumer markets feature a multi-dimensional price. A policymaker -a legislator, a regulator or a court -concerned about the level of one price dimension may decide to cap this price. How will such a price cap affect other price dimensions? Will the overall effect be good or bad for consumers? For social welfare? Price caps can be beneficial when sellers set prices in response to consumer misperception. The scope for welfareenhancing regulation depends on the type (and direction) of the underlying misperception, as well as on market structure.

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“…If consumers exhibit self‐control problems in this market, then the prediction from the existing models of consumers with self‐control problems is that credit card issuers should attract consumers with low introductory rates and then charge higher rates after an initial period—attracting consumers and then charging a price above the marginal cost. However, roughly 80% of the offers do not involve a lower introductory rate predicted by existing models (see Bar‐Gill and Bubb, ).…”

Section: Comparison With Existing Researchmentioning

confidence: 96%

Competing for Consumers with Self‐Control Problems

Alexandrov¹

2015

Economics Manag Strategy

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I examine strategic implications of competing for consumers with self‐control problems. For investment goods, like health clubs, I find that the equilibrium sign‐up (lump‐sum) fees decrease when competition intensifies, similarly to prices in standard oligopoly models. However, the equilibrium attendance (per‐unit) price increases due to firms' deteriorated ability to take advantage of consumers' self‐control problems. Moreover, firms earn less profit due to consumers' self‐control problems—the firms have a unilateral incentive to charge per‐unit fees lower than the marginal cost; however, they cannot make up the lost margins by increasing the lump‐sum fee, due to competition. I also show that for plausible parameter regions the market adjusts to consumers' self‐control problem in such a way that firms play the standard equilibrium strategies that they would have engaged in with fully rational consumers, with identical market outcomes. Most of the results are qualitatively the same for leisure goods (for example, credit cards); however, some results are reversed: the per‐unit fees are higher than marginal cost and decrease as competition intensifies.

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Credit Card Pricing: The CARD Act and Beyond

Cited by 26 publications

References 0 publications

Debt Collection Agencies and the Supply of Consumer Credit

Debt Collection Agencies and the Supply of Consumer Credit

Price Caps in Multiprice Markets

Competing for Consumers with Self‐Control Problems

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