Price Discrimination Through Barter: A Theory and Evidence from Russia

Sergei Guriev and Dmitry Kvassov
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Dmitry Kvassov: Pennsylvania State University
Authors registered in the RePEc Author Service: Dmitriy Kvasov

No 397, Econometric Society World Congress 2000 Contributed Papers from Econometric Society

Abstract: We build a model of imperfect competition where firms can sell for cash or in-kind payments. Barter is indivisible, and there is no double coincidence of wants. Despite these deficiencies, barter emerges in equilibrium as a means of price discrimination if market power is sufficiently concentrated. The model predicts negative correlation between number of sellers and share of barter in sales. We also show that barter disappears at certain level of concentration. Using survey data on Russian firms, we show that empirical evidence is consistent with predictions of the model. Sergei Guriev, Ph.D.

Date: 2000-08-01
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