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Barter for price discrimination? A theory and evidence from Russia

  • Sergei Guriev

    ()

    (New Economic School, CEPR and WDI)

  • Dmitry Kvassov

    ()

    (Pennsylvania State University)

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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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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  1. Caves, R.E. & Marin, D., 1992. "Countertrade Transactions: Theory and Evidence," Harvard Institute of Economic Research Working Papers 1599, Harvard - Institute of Economic Research.
  2. Polterovich, Victor, 1999. "Институциональные Ловушки И Экономические Реформы
    [Institutional Traps and Economic Reforms]
    ," MPRA Paper 27257, University Library of Munich, Germany.
  3. Andrews, Donald W K, 1993. "Tests for Parameter Instability and Structural Change with Unknown Change Point," Econometrica, Econometric Society, vol. 61(4), pages 821-56, July.
  4. Guriev, Sergei & Kvassov, Dmitri, 2004. "Barter for price discrimination," International Journal of Industrial Organization, Elsevier, vol. 22(3), pages 329-350, March.
  5. Ivaldi, M. & Martimort, D., 1992. "Competition Under Nonlinear Pricing," Papers 93.288, Toulouse - GREMAQ.
  6. Kranton, Rachel E, 1996. "Reciprocal Exchange: A Self-Sustaining System," American Economic Review, American Economic Association, vol. 86(4), pages 830-51, September.
  7. Ellingsen, Tore, 1998. "Payments in Kind," SSE/EFI Working Paper Series in Economics and Finance 244, Stockholm School of Economics, revised 10 Feb 2000.
  8. Brown, A.N. & Ickes, B. & Ryterman, R., 1993. "The Myth of Monopoly: A New View of Industrial Structure in Russia," Papers 10-93-5, Pennsylvania State - Department of Economics.
  9. 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.
  10. Daniel Kaufman & Dalia Marin, 1998. "Disorganization, financial squeeze, barter," William Davidson Institute Working Papers Series 165, William Davidson Institute at the University of Michigan.
  11. 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.
  12. Hart, Oliver, 1995. "Firms, Contracts, and Financial Structure," OUP Catalogue, Oxford University Press, number 9780198288817, March.
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