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Price Discrimination Through Barter: A Theory and Evidence from Russia

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  • Sergei Guriev

    (New Economic School)

  • Dmitry Kvassov

    (Pennsylvania State University)

Abstract

We build a model of imperfect competition where firms can sell for cash or in-kind payments. Barter is indivisible, and there is no double coincidence of wants. Despite these deficiencies, barter emerges in equilibrium as a means of price discrimination if market power is sufficiently concentrated. The model predicts negative correlation between number of sellers and share of barter in sales. We also show that barter disappears at certain level of concentration. Using survey data on Russian firms, we show that empirical evidence is consistent with predictions of the model. Sergei Guriev, Ph.D.

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Bibliographic Info

Paper provided by Econometric Society in its series Econometric Society World Congress 2000 Contributed Papers with number 0397.

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Date of creation: 01 Aug 2000
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Handle: RePEc:ecm:wc2000:0397

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  1. Banerjee, Abhijit V & Maskin, Eric S, 1996. "A Walrasian Theory of Money and Barter," The Quarterly Journal of Economics, MIT Press, vol. 111(4), pages 955-1005, November.
  2. Marin, Dalia & Schnitzer, Monika, 1995. "Tying Trade Flows: A Theory of Countertrade with Evidence," American Economic Review, American Economic Association, vol. 85(5), pages 1047-64, December.
  3. Williamson, S. & Wright, R., 1991. "Barter and Monetary Exchange Under Private Information," University of Western Ontario, The Centre for the Study of International Economic Relations Working Papers 9107, University of Western Ontario, The Centre for the Study of International Economic Relations.
  4. Daniel Kaufman & Dalia Marin, 1998. "Disorganization, financial squeeze, barter," William Davidson Institute Working Papers Series 165, William Davidson Institute at the University of Michigan.
  5. Sophie Brana & Mathilde Maurel, 1999. "Barter in Russia: Liquidity Shortage versus Lack of Restructuring," William Davidson Institute Working Papers Series 271, William Davidson Institute at the University of Michigan.
  6. Caves, Richard E. & Marin, Dalia, 1992. "Countertrade transactions: theory and evidence," Munich Reprints in Economics 19952, University of Munich, Department of Economics.
  7. V. Makarov & G. Kleiner, 2000. "Barter in Russia," Problems of Economic Transition, M.E. Sharpe, Inc., vol. 42(11), pages 51-79, March.
  8. Abhijit V. Banerjee & Eric S. Maskin, 1996. "A Walrasian Theory of Money," Harvard Institute of Economic Research Working Papers 1753, Harvard - Institute of Economic Research.
  9. Ellingsen, Tore, 1998. "Payments in Kind," Working Paper Series in Economics and Finance 244, Stockholm School of Economics, revised 10 Feb 2000.
  10. Wendy Carlin & Steven Fries & Mark Schaffer & Paul Seabright, 2000. "Barter and non-monetary transactions in transition economies: Evidence from a cross-country survey," Working Papers 50, European Bank for Reconstruction and Development, Office of the Chief Economist.
  11. 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.
  12. Stewart C. Myers & Raghuram G. Rajan, 1998. "The Paradox of Liquidity," CRSP working papers 339, Center for Research in Security Prices, Graduate School of Business, University of Chicago.
  13. Clifford Gaddy & Barry W. Ickes, 1998. "To Restructure or Not to Restructure: Informal Activities and Enterprise Behavior in Transition," William Davidson Institute Working Papers Series 134, William Davidson Institute at the University of Michigan.
  14. Sergei Aukutsionek, 1998. "Industrial barter in Russia," Post-Communist Economies, Taylor & Francis Journals, vol. 10(2), pages 179-188.
  15. 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.
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Cited by:
  1. 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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