Arbeitspapier

Incorporating a "public good factor" into the pricing of large-value payment systems

We study optimal pricing rules for a public large-value payment system (LVPS) that produces a public good (like prevention of systemic risk) but faces competition by a private LVPS for the private provision of large value payments. We show that the marginal cost of the public LVPS has to be corrected by a "public good factor"that can be interpreted alternatively as the decrease in the cost of providing the public good when the private activity of the public system increases, or as the subsidy needed for private banks to internalize the cost of systemic risk. In either interpretation, the public good factor is easy to measure: it corresponds to the subsidy needed for private banks to allocate their payments in the way that is desired by banking authorities.

Language: Englisch

Bibliographic citation: Series: ECB Working Paper ; No. 507

Classification: Wirtschaft
Financial Institutions and Services: Government Policy and Regulation
Public Goods

Subject: large-value payment systems
pricing rules
public goods
Zahlungsverkehr
Öffentliche Güter
Preismanagement
Theorie

Event: Geistige Schöpfung

(who): Holthausen, Cornelia
Rochet, Jean-Charles

Event: Veröffentlichung

(who): European Central Bank (ECB)

(where): Frankfurt a. M.

(when): 2005

Handle: http://hdl.handle.net/10419/152941

Last update: 10.03.2025, 11:44 AM CET

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Object type

Arbeitspapier

Associated

Holthausen, Cornelia
Rochet, Jean-Charles
European Central Bank (ECB)

Time of origin

2005

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