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Barter for price discrimination? A theory and evidence from Russia

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Author Info

  • Sergei Guriev

    ()
    (New Economic School, CEPR and WDI)

  • Dmitry Kvassov

    ()
    (Pennsylvania State University)

Abstract

Unprecedented demonetization of Russia’s transition economy has been explained by tight monetary policy, tax evasion and poor …nancial intermediation. We show that market power may also be important. We build a model of imperfect competition in which …rms use barter for price discrimination. The model predicts a positive relationship between concentration of market power and share of barter in sales. The model has multiple equilibria which may explain persistence of barter in Russia but not in other economies. Using a unique dataset on barter transactions in Russia, we show that the …rm-level evidence is consistent with the model’s predictions.

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Bibliographic Info

Paper provided by Center for Economic and Financial Research (CEFIR) in its series Working Papers with number w0007.

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Length: 38 pages
Date of creation: Oct 2000
Date of revision:
Handle: RePEc:cfr:cefirw:w0007

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Related research

Keywords: barter; price discrimination; Cournot oligopoly;

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References

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  1. Caves, Richard E & Marin, Dalia, 1992. "Countertrade Transactions: Theory and Evidence," Economic Journal, Royal Economic Society, vol. 102(414), pages 1171-83, September.
  2. Polterovich, Victor, 1999. "Институциональные Ловушки И Экономические Реформы
    [Institutional Traps and Economic Reforms]
    ," MPRA Paper 27257, University Library of Munich, Germany.
  3. Ellingsen, Tore & Stole, Lars A., 1996. "Mandated countertrade as a strategic commitment," Journal of International Economics, Elsevier, vol. 40(1-2), pages 67-84, February.
  4. Ellingsen, Tore, 1998. "Payments in Kind," Working Paper Series in Economics and Finance 244, Stockholm School of Economics, revised 10 Feb 2000.
  5. Hart, Oliver, 1995. "Firms, Contracts, and Financial Structure," OUP Catalogue, Oxford University Press, number 9780198288817.
  6. Brana, S. & Maurel, M., 1999. "Barter in Russia : Liquidity Shortage Versus Lack of Restructuring," Papiers d'Economie Mathématique et Applications 1999.98, Université Panthéon-Sorbonne (Paris 1).
  7. Ivaldi, Marc & Martimort, David, 1993. "Competition under Nonlinear Pricing," IDEI Working Papers 29, Institut d'Économie Industrielle (IDEI), Toulouse.
  8. Donald W.K. Andrews, 1990. "Tests for Parameter Instability and Structural Change with Unknown Change Point," Cowles Foundation Discussion Papers 943, Cowles Foundation for Research in Economics, Yale University.
  9. Daniel Kaufman & Dalia Marin, 1998. "Disorganization, financial squeeze, barter," William Davidson Institute Working Papers Series 165, William Davidson Institute at the University of Michigan.
  10. Guriev, Sergei & Kvassov, Dmitry, 2000. "Barter For Price Discrimination?," CEPR Discussion Papers 2449, C.E.P.R. Discussion Papers.
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Citations

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Cited by:
  1. Vlad Ivanenko & Dmitry Mikheyev, 2002. "The Role of Non-monetary Trade in Russian Transition," Post-Communist Economies, Taylor & Francis Journals, vol. 14(4), pages 405-419.
  2. Babu Nahata & Alexei Izyumov & Vladimir Busygin & Anna Mishura, 2003. "An application of Ramsey model in transition economy: a Russian case study," General Economics and Teaching 0307003, EconWPA.
  3. Vlad Ivanenko, 2004. "Access to liquidity and non-monetary trade in Russia," Post-Communist Economies, Taylor & Francis Journals, vol. 16(1), pages 21-38.
  4. Dolud, Olena, 2004. "Nichtmonetäre Transaktionen in der ukrainischen Landwirtschaft: Determinanten, Spezifika und Folgen," Studies on the Agricultural and Food Sector in Central and Eastern Europe, Leib­niz Institute of Agricultural Development in Central and Eastern Europe (IAMO), volume 24, number 93080.

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