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Countertrade Transactions: Theory and Evidence

Author

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  • Caves, R.E.
  • Marin, D.

Abstract

Countertrade consists of bilateral agreements (usually) between Western industrial enterprises and government agencies or state-owned enterprises in developing countries (LDCs) and centrally planned economies (CPEs), whereby sales of goods by the western exporter are linked contractually to the exporter’s purchases of other goods or services from the countertrade partner. This paper reports findings from a sample of 230 countertrade agreements. We develop an analytical framework that both explains the mutual attraction of countertrade deals to the parties and predicts the terms of trade in individual transactions. Various statistical tests serve to assess assumptions underlying the model, evaluate various predictions and corollaries, and distinguish between certain competing hypotheses about the motives or effects of countertrade transactions. -from Authors
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Suggested Citation

  • Caves, R.E. & Marin, D., 1992. "Countertrade Transactions: Theory and Evidence," Harvard Institute of Economic Research Working Papers 1599, Harvard - Institute of Economic Research.
    • Handle: RePEc:fth:harver:1599
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    Cited by:

    1. Marshall, John F. & Wynne, Kevin J., 1996. "Synthetic barter: Simulating countertrade solutions with swaps," Global Finance Journal, Elsevier, vol. 7(1), pages 1-12.
    2. repec:cty:dpaper:10.2202/1534-598x.1102 is not listed on IDEAS
    3. Guriev, Sergei & Kvassov, Dmitri, 2004. "Barter for price discrimination," International Journal of Industrial Organization, Elsevier, vol. 22(3), pages 329-350, March.
    4. Ellingsen, Tore, 1998. "Payments in Kind," SSE/EFI Working Paper Series in Economics and Finance 244, Stockholm School of Economics, revised 10 Feb 2000.
    5. Germán H. GONZALEZ & Alexis S. ESPOSTO & Valentina N. VIEGO, 2015. "Reciprocity in bilateral trade flows: An empirical analysis for trade between Australia and Latin American countries," Applied Econometrics and International Development, Euro-American Association of Economic Development, vol. 15(1), pages 31-44.
    6. repec:cty:dpaper:1421 is not listed on IDEAS
    7. Ewa Baranowska-Prokop & Jacek Prokop, 2007. "Dyskryminacja cenowa a transakcje wiązane," Gospodarka Narodowa. The Polish Journal of Economics, Warsaw School of Economics, issue 3, pages 67-84.
    8. Amann, Erwin & Marin, Dalia, 1994. "Risk-Sharing in International Trade," Munich Reprints in Economics 3110, University of Munich, Department of Economics.
    9. Vesa Kanniainen & Juha-Matti Lehtonen, 2019. "Offset Contracts as an Insurance Device in Building the National Security," Defence and Peace Economics, Taylor & Francis Journals, vol. 30(1), pages 85-97, January.
    10. Jacek Prokop & Ewa Baranowska-Prokop, 2006. "Asymetria informacji a transakcje wiązane," Gospodarka Narodowa. The Polish Journal of Economics, Warsaw School of Economics, issue 7-8, pages 9-25.
    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. 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.
    13. Sergei Guriev & Dmitry Kvassov, 2000. "Barter for price discrimination? A theory and evidence from Russia," Working Papers w0007, New Economic School (NES).
    14. Dalia Marin & Monika Schnitzer, 2002. "The Economic Institution Of International Barter," Economic Journal, Royal Economic Society, vol. 112(479), pages 293-316, April.
    15. Caves, Richard E & Marin, Dalia, 1992. "Countertrade Transactions: Theory and Evidence," Economic Journal, Royal Economic Society, vol. 102(414), pages 1171-1183, September.
    16. 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.

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