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The Economic Institution of International Barter

Author

Listed:
  • Marin, Dalia
  • Schnitzer, Monika

Abstract

Starting with the international debt crisis in the early 1980s, the volume of international barter trade increased substantially. This paper examines how barter can help highly indebted countries to finance imports if they cannot use standard credit arrangements. We argue that payment in goods is easier to enforce than payment in money. But there is also a risk that the debtor pays with inferior quality products. We rank goods with respect to these incentive properties and derive the economic institution of commodity money which explains the trade pattern in barter. The predictions of our model are consistent with data on actual barter contracts.

Suggested Citation

  • Marin, Dalia & Schnitzer, Monika, 1997. "The Economic Institution of International Barter," CEPR Discussion Papers 1658, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:1658
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    Cited by:

    1. Jinjarak, Yothin, 2007. "Foreign direct investment and macroeconomic risk," Journal of Comparative Economics, Elsevier, vol. 35(3), pages 509-519, September.
    2. Dalia Marin & Monika Schnitzer, 1998. "Economic incentives and international trade," European Economic Review, Elsevier, vol. 42(3-5), pages 705-716, May.
    3. Barbara, CRESTI, 2003. "U.S. Domestic Barter : an Empirical Investigation," LIDAM Discussion Papers IRES 2003005, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
    4. Dalia Marin & Monika Schnitzer, 2007. "Disorganization and Financial Collapse," Palgrave Macmillan Books, in: Erik Berglöf & Gérard Roland (ed.), The Economics of Transition, chapter 4, pages 70-93, Palgrave Macmillan.
    5. Jose Noguera, 2004. "The transmission mechanism to barter," CERGE-EI Working Papers wp243, The Center for Economic Research and Graduate Education - Economics Institute, Prague.
    6. Jose Noguera, 2004. "Is Barter a Hobson’s Choice? A theory of barter and credit rationing," CERGE-EI Working Papers wp239, The Center for Economic Research and Graduate Education - Economics Institute, Prague.
    7. Choi, C. J. & Dassiou, X. & Maldoom, D., 2003. "Trade and Linked Exchange; Price Discrimination Through Transaction Bundling," Working Papers 03/07, Department of Economics, City St George's, University of London.
    8. repec:cty:dpaper:10.2202/1534-598x.1102 is not listed on IDEAS
    9. María del Carmen García‐Alonso & Paul Levine & Antonia Morga, 2004. "Export Credit Guarantees, Moral Hazard and Exports Quality," Bulletin of Economic Research, Wiley Blackwell, vol. 56(4), pages 311-327, October.
    10. Barbara Cresti, 2005. "US domestic barter: an empirical investigation," Applied Economics, Taylor & Francis Journals, vol. 37(17), pages 1953-1966.
    11. Marianna Belloc, 2006. "Institutions and International Trade: A Reconsideration of Comparative Advantage," Journal of Economic Surveys, Wiley Blackwell, vol. 20(1), pages 3-26, February.
    12. Ellingsen, Tore, 1998. "Payments in Kind," SSE/EFI Working Paper Series in Economics and Finance 244, Stockholm School of Economics, revised 10 Feb 2000.
    13. Oana Răvaș, 2011. "The Utility of the Barter Agreement in International Commercial Trade," Annals of the University of Petrosani, Economics, University of Petrosani, Romania, vol. 11(1), pages 223-234.
    14. repec:cty:dpaper:1421 is not listed on IDEAS
    15. Yangyang Huang & Zhenyang Pi & Weiguo Fang, 2021. "Trade Credit with Barter in a Capital-Constrained Supply Chain," Sustainability, MDPI, vol. 13(20), pages 1-15, October.
    16. Jose Noguera & Susan Linz, 2003. "A Theoretical Model of Barter in Russia," CERGE-EI Working Papers wp207, The Center for Economic Research and Graduate Education - Economics Institute, Prague.
    17. Yang, Fan & Yu, Hai & Wilson, Craig & Jacoby, Gady & Wu, Zhenyu, 2024. "Blockchain technology and international countertrade," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 91(C).

    More about this item

    Keywords

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    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F34 - International Economics - - International Finance - - - International Lending and Debt Problems
    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation

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