Barter For Price Discrimination?

Sergei Guriev and Dmitriy Kvasov

No 2449, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: Unprecedented growth of barter is a striking phenomenon of Russia’s transition. The explanations of barter include tight monetary policy, tax evasion and poor financial inter-mediation. We show that the market power may also be important. We build a model of imperfect competition in which firms use barter for price discrimination. The model predicts a positive relationship between the concentration of market power and the share of barter in sales. We also show that barter disappears at a certain level of competition. The model has multiple stable equilibria which may explain persistence of barter. Using a unique data set on barter transactions in Russia, we show that empirical evidence is consistent with the model’s predictions.

Keywords: Price discrimination; Oligopoly (search for similar items in EconPapers)
JEL-codes: D43 L13 P42 (search for similar items in EconPapers)
Date: 2000-05
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Citations: View citations in EconPapers (10)

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Journal Article: Barter for price discrimination (2004)
Working Paper: Barter for price discrimination (2004)
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