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Economic Incentives and International Trade

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Author Info
Dalia Marin
Monika Schnitzer

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Abstract

This paper studies the importance of incentives as a determinant of international trade flows. We argue that barter, countertrade and foreign direct investment can be seen as efficient institutions that mitigate contractual hazards which arise in technology trade, marketing and imperfect capital markets. Paying an import with export goods rather than cash (barter) helps to overcome incentive problems that arise in debt repayment of highly indebted countries. Payment in export goods removes the anonymity of the medium of exchange and thus allows to create a collateral for the creditor. Furthermore, tying an import with an export (countertrade) helps to solve the incentive problems related to the technology transfer to developing countries. The export flow serves as a "hostage" that deters cheating on the quality of the imported technology good. The predictions of the two models are consistent with the pattern of trade of actual barter and countertrade contracts.

ZUSAMMENFASSUNG - (Ökonomische Anreize und internationaler Handel) ´
Diese Studie untersucht die Bedeutung von ökonomischen Anreizen als Bestimmungsgröße internationaler Handelsflüsse. Wir argumentieren, daß ausländische Direktinvestitionen, Joint Ventures, der Barterhandel und Kompensationsgeschäfte als effiziente Institutionen angesehen werden können, die Anreizprobleme vermeiden helfen, die bei dem Technologiehandel, bei der Vermarktung neuer Produkte und auf unvollkommenen Kapitalmärkten auftreten. Die Bezahlung eines Imports mit Exportgütern, statt mit Geld (Barter), hilft, Anreizprobleme zu überwinden, die in hochverschuldeten Ländern bei der Schuldentilgung auftreten. Die Zahlung mit Gütern hebt die Anonymität des Tauschmediums auf und erlaubt somit dem Gläubiger eine Sicherheit für seinen Kredit zu schaffen. Die Verknüpfung eines Imports mit einem Export (Countertrade) hilft die Anreizprobleme zu überwinden, die mit dem Technologietransfer in Entwicklungsländer verbunden sind. Das Exportgeschäft dient als "Geisel" im Sinne von O. Williamson, die dazu dient, Betrugsanreize im Importgeschäft bei der Lieferung der Technologie abzuschrecken. Dadurch kann Countertrade als ein erst-bestes Substitut für eine ausländische Direktinvestition angesehen werden, bei der die Anreizprobleme bei der Technologielieferung durch eine firmeninterne Organisation gelöst werden. Die Voraussagen beider Modelle sind konsistent mit den Spezialisierungsmuster des Barter- und Countertrade- Handels.

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Publisher Info
Paper provided by Wissenschaftszentrum Berlin (WZB), Research Unit: Competition and Innovation (CIG) in its series CIG Working Papers with number FS IV 97-24.

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Length: 16 pages
Date of creation: Oct 1997
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Publication status: Published in: R. Mirus/B. Yeung (eds.): The Economics of Barter and Countertrade. Cheltenham, U.K.: Elgar, 2001, pp. 113-144.
Handle: RePEc:wzb:wzebiv:fsiv97-24

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Related research
Keywords: Intermediation; Market Microstructure; Matching; Uncertainty; Innovation; Patent Licensing;

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Chan, Raissa & Hoy, Michael, 1991. "East--West joint ventures and buyback contracts," Journal of International Economics, Elsevier, vol. 30(3-4), pages 331-343, May. [Downloadable!] (restricted)
  2. Bulow, Jeremy & Rogoff, Kenneth, 1989. "A Constant Recontracting Model of Sovereign Debt," Journal of Political Economy, University of Chicago Press, vol. 97(1), pages 155-78, February. [Downloadable!] (restricted)
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  3. Greif, Avner, 1992. "Institutions and International Trade: Lessons from the Commercial Revolution," American Economic Review, American Economic Association, vol. 82(2), pages 128-33, May. [Downloadable!] (restricted)
  4. Marin, Dalia & Schnitzer, Monika, 1997. "The Economic Institution of International Barter," CEPR Discussion Papers 1658, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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Cited by:
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  1. Xeni Dassiou & Chong Ju Choi & Dan Maldoom, 2004. "Trade and Linked Exchange; Price Discrimination Through Transaction Bundling," The B.E. Journal of Theoretical Economics, Berkeley Electronic Press, vol. 0(1). [Downloadable!]
  2. Jarko Fidrmuc & Sylvia Kaufmann & Andreas Resch, 2008. "Structural breaks in Austrian foreign trade with Eastern Europe during the early 1970s," Empirica, Springer, vol. 35(5), pages 465-479, December. [Downloadable!] (restricted)
  3. Chong Ju Choi & Xeni Dassiou & Daniel Maldoom, 2003. "Trade and Linked Exchange; Price Discrimination Through Transaction Bundling," City University Economics Discussion Papers 03/07, Department of Economics, City University, London. [Downloadable!]
  4. Maria del Carmen Garcia-Alonso & Paul Levine & Antonia Morga, 2004. "Export Credit Gurantees, Moral Hazard and Exports Quality," Studies in Economics 0402, Department of Economics, University of Kent. [Downloadable!]
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