Local Advantage in a Global Context
New Horizons in Regional Science series
Edited by Charlie Karlsson, Börje Johansson and Roger R. Stough
Chapter 10: Economic Evaluation of Pre- and Post-Discounting Fee Systems
Kakuya Matsushima and Kiyoshi Kobayashi 10.1 INTRODUCTION Thanks to the innovation of information technology (IT), various financial settlement systems are developing rapidly. With the advance of IT, it is possible to set various fare systems for both public transportation and toll roads, e.g. the IC (integrated circuit) settlement service for railway companies and the ETC (electronic toll collection) system for highways. Thanks to such high-level settlement technology, a new system can be introduced where both consuming and travelling behaviours can be bundled. Consumers’ behaviour of buying something with their credit cards has the effect of releasing their personal information to credit card companies. On the other hand, firms also reveal their information to credit card companies by offering settlement services with credit cards. Each stakeholder who attends this transaction can acquire information about other stakeholders by using this settlement system. In that sense, settlement services by credit card can be considered as an ‘information club’. Once we see bundling service between consuming and travelling as an information club, indirect effects that are produced by settlement services in transportation markets can be analysed. People who enjoy settlement services by credit card automatically send fruitful information that they are frequent consumers of the service. Firms who join the information club can send information to consumers who are involved in the club more effectively, which reduces transaction costs. In addition, when both transportation firms and retailers join the information club, both travelling and consuming behaviours, which were treated independently, can be bundled. This...
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