Payments in Kind
Payments in kind pose an enduring and empirically important puzzle. The paper provides a formalization of the popular view that payment in kind are due to financial constraints. The key assumption is that buyers' liquidity is private information. Buyers who are financially constrained may prove their hardship by making part of the payment in kind. The paper models explicitly the credit market imperfections which lead to payments in kind and yields predictions which are consistent with a number of empirical observations. In particular, it offers a coherent explanation for the recent explosion of barter in Russia and other former Soviet republics.
|Date of creation:||09 Jun 1998|
|Date of revision:||10 Feb 2000|
|Contact details of provider:|| Postal: The Economic Research Institute, Stockholm School of Economics, P.O. Box 6501, 113 83 Stockholm, Sweden|
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- Marin, Dalia & Schnitzer, Monika, 1999.
"Disorganization and Financial Collapse,"
CEPR Discussion Papers
2245, C.E.P.R. Discussion Papers.
- Dalia Marin & Monika Schnitzer, 2000. "Disorganization and Financial Collapse," CESifo Working Paper Series 339, CESifo Group Munich.
- Dalia Marin & Monika Schnitzer, 1999. "Disorganization and Financial Collapse," William Davidson Institute Working Papers Series 285, William Davidson Institute at the University of Michigan.
- Marin, Dalia & Schnitzer, Monika, 2005. "Disorganization and financial collapse," Munich Reprints in Economics 19258, University of Munich, Department of Economics.
- Caves, R.E. & Marin, D., 1992.
"Countertrade Transactions: Theory and Evidence,"
Harvard Institute of Economic Research Working Papers
1599, Harvard - Institute of Economic Research.
- Caves, Richard E. & Marin, Dalia, 1992. "Countertrade transactions: theory and evidence," Munich Reprints in Economics 19952, University of Munich, Department of Economics.
- Caves, Richard E. & Marin, Dalia, 1992. "Countertrade Transactions: Theory and Evidence," Munich Reprints in Economics 3111, University of Munich, Department of Economics.
- Marin, Dalia & Schnitzer, Monika, 1994.
"Tying Trade Flows: A Theory of Countertrade,"
CEPR Discussion Papers
946, C.E.P.R. Discussion Papers.
- Timothy J. Kehoe & Nobuhiro Kiyotaki & Randall Wright, 1991.
"More on money as a medium of exchange,"
140, Federal Reserve Bank of Minneapolis.
- Daniel Kaufman & Dalia Marin, 1998. "Disorganization, financial squeeze, barter," William Davidson Institute Working Papers Series 165, William Davidson Institute at the University of Michigan.
- Canice Prendergast & Lars Stole, 2001. "Barter, Liquidity and Market Segmentation," CESifo Working Paper Series 586, CESifo Group Munich.
- 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.
- Oliver Hart & John Moore, 1998. "Default and Renegotiation: A Dynamic Model of Debt," The Quarterly Journal of Economics, Oxford University Press, vol. 113(1), pages 1-41.
- Holmstrom, B & Tirole, J, 1996.
"Private and Public Supply of Liquidity,"
96-21, Massachusetts Institute of Technology (MIT), Department of Economics.
- 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.
- Dalia Marin & Monika Schnitzer, 2002.
"The Economic Institution Of International Barter,"
Royal Economic Society, vol. 112(479), pages 293-316, April.
- Marin, Dalia & Schnitzer, Monika, 2002. "The economic institution of international barter," Munich Reprints in Economics 19260, University of Munich, Department of Economics.
- Marin, Dalia & Schnitzer, Monika, 1997. "The Economic Institution of International Barter," CEPR Discussion Papers 1658, C.E.P.R. Discussion Papers.
- Blackorby, Charles & Donaldson, David, 1988. "Cash versus Kind, Self-selection, and Efficient Transfers," American Economic Review, American Economic Association, vol. 78(4), pages 691-700, September.
- Bolton, Patrick & Scharfstein, David S, 1990. "A Theory of Predation Based on Agency Problems in Financial Contracting," American Economic Review, American Economic Association, vol. 80(1), pages 93-106, March.
- Brennan, Michael J & Maksimovic, Vojislav & Zechner, Josef, 1988. " Vendor Financing," Journal of Finance, American Finance Association, vol. 43(5), pages 1127-1141, December.
- Kiyotaki, Nobuhiro & Wright, Randall, 1989. "On Money as a Medium of Exchange," Journal of Political Economy, University of Chicago Press, vol. 97(4), pages 927-954, August.
- Choi, Chong J. & Maldoom, Daniel, 1992. "A simple model of buybacks," Economics Letters, Elsevier, vol. 40(1), pages 77-82, September.
- Canice Prendergast & Lars A. Stole, 1996. "Non-Monetary Exchange Within Firms and Industry," NBER Working Papers 5765, National Bureau of Economic Research, Inc.
- Smith, Janet Kiholm, 1987. " Trade Credit and Informational Asymmetry," Journal of Finance, American Finance Association, vol. 42(4), pages 863-872, September.
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