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Tying Trade Flows: A Theory of Countertrade with Evidence


  • Marin, Dalia
  • Schnitzer, Monika


A countertrade contract ties an export to an import. Usually, countertrade is criticized as a form of bilateralism and reciprocity and, thus, as an inefficient form of international exchange. In this paper, the authors argue that there are circumstances in which the tying of two technologically unrelated trade flows may be efficiency-enhancing. They show that countertrade can be an efficient institution in international trade that solves moral-hazard problems and restores creditworthiness of highly indebted countries. The authors test the implications of their model using a sample of 230 countertrade contracts. Copyright 1995 by American Economic Association.

Suggested Citation

  • Marin, Dalia & Schnitzer, Monika, 1995. "Tying Trade Flows: A Theory of Countertrade with Evidence," American Economic Review, American Economic Association, vol. 85(5), pages 1047-1064, December.
  • Handle: RePEc:aea:aecrev:v:85:y:1995:i:5:p:1047-64

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    References listed on IDEAS

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    Cited by:

    1. Dalia Marin & Monika Schnitzer, 2002. "The Economic Institution Of International Barter," Economic Journal, Royal Economic Society, vol. 112(479), pages 293-316, April.
    2. Marin, Dalia & Schnitzer, Monika, 2005. "Disorganization and financial collapse," European Economic Review, Elsevier, vol. 49(2), pages 387-408, February.
    3. Guido Friebel & Sergei Guriev, 1999. "Why Russian Workers Do Not Move: Attachment of Workers Through In-Kind Payments," William Davidson Institute Working Papers Series 283, William Davidson Institute at the University of Michigan.
    4. Dassiou Xeni & Choi Chong Ju & Maldoom Dan, 2004. "Trade and Linked Exchange; Price Discrimination Through Transaction Bundling," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 4(1), pages 1-17, May.
    5. 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.
    6. Marin, Dalia & Schnitzer, Monika, 2011. "When is FDI a capital flow?," European Economic Review, Elsevier, vol. 55(6), pages 845-861, August.
    7. Barbara, CRESTI, 2003. "U.S. Domestic Barter : an Empirical Investigation," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) 2003005, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
    8. Ryan-Collins, Josh, 2010. "Not so "Mickey Mouse": Lessons in the nature of modern money from complementary monetary innovations," economic sociology_the european electronic newsletter, Max Planck Institute for the Study of Societies, vol. 12(1), pages 58-67.
    9. Canice Prendergast & Lars Stole, 2001. "Barter, Liquidity and Market Segmentation," CESifo Working Paper Series 586, CESifo Group Munich.
    10. 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.
    11. Dalia Marin, 2006. "A New International Division of Labor in Europe: Outsourcing and Offshoring to Eastern Europe," Journal of the European Economic Association, MIT Press, vol. 4(2-3), pages 612-622, 04-05.
    12. Marin, Dalia, 2005. "A New International Division of Labor in Europe: Offshoring and Outsourcing to Eastern Europe," Discussion Papers in Economics 714, University of Munich, Department of Economics.
    13. Matti Liski & Juha Virrankoski, 2004. "Frictions in Project-Based Supply of Permits," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 28(3), pages 347-365, July.
    14. Barbara Cresti, 2005. "US domestic barter: an empirical investigation," Applied Economics, Taylor & Francis Journals, vol. 37(17), pages 1953-1966.
    15. Sergei Guriev & Dmitry Kvassov, 2000. "Price Discrimination Through Barter: A Theory and Evidence from Russia," Econometric Society World Congress 2000 Contributed Papers 0397, Econometric Society.
    16. Tao, Zhigang & Wang, Susheng, 1998. "Foreign Direct Investment and Contract Enforcement," Journal of Comparative Economics, Elsevier, vol. 26(4), pages 761-782, December.
    17. Stodder, James, 2009. "Complementary credit networks and macroeconomic stability: Switzerland's Wirtschaftsring," Journal of Economic Behavior & Organization, Elsevier, vol. 72(1), pages 79-95, October.

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