Fixed Transaction Markups: A Case

Any government fully interfacing into a new system of e-markets will create a significant business opportunity. To take one example, a commitment that public expenditure must flow into communities through the system unless better value is demonstrable elsewhere could see huge chunks of the 35% or so of GDP spent by public agencies going through those markets to kickstart activity. Policymakers must get the best value for market users in return. Lowest viable transaction charges are a key part of that. 

 

The optimal mechanism - to be embedded in an enabling concession -  is a demand putative operators specify what flat-rate percentage markup they will add to each transaction to recoup their costs and make a return. The consortium committing to the lowest rate then wins the concession. 

 

To balance this commitment, a concession must also outlaw any cap on operators' profits. So, a consortium winning the concession is offered an explicit pact: grow microeconomic activity across our region within the boundaries of this legislation and there is no limit on your revenue. When setting a rate aimed at underpricing rivals, putative operators need to factor in other public service obligations including a Maximum Average Transaction Size and Decentralized Operations.

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