Barter for price discrimination

Sergei Guriev and Dmitriy Kvasov
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Dmitriy Kvasov: University of Adelaide

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Abstract: We study barter as a discriminatory instrument in oligopoly with asymmetric information. Buyers (producers of final goods) differ in the quality of their products. Sellers (producers of inputs) use barter as a screening device: the higher quality buyers pay in cash while the lower quality ones pay in kind. Barter, identified with non-monetary contracts that give a seller control over a buyer's output, emerges in equilibrium even in the absence of financial constraints. There is a positive relationship between market concentration and the level of barter. Barter disappears as the market becomes more competitive. Barter and no-barter equilibria coexist for a range of market structures.

Keywords: Barter; Price discrimination; Oligopoly (search for similar items in EconPapers)
Date: 2004-03
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Published in International Journal of Industrial Organization, 2004, 22 (3), pp.329 - 350. ⟨10.1016/j.ijindorg.2003.09.003⟩

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Related works:
Journal Article: Barter for price discrimination (2004)
Working Paper: Barter For Price Discrimination? (2000)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-03416759

DOI: 10.1016/j.ijindorg.2003.09.003

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