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Title: Barter For Price Discrimination?

Author(s): Sergei Guriev and Dmitry Kvassov

Publication Date: May 2000

Keyword(s): Barter, Oligopoly and Price Discrimination

Programme Area(s): Transition Economics

Abstract: Unprecendented growth of barter is a striking phenomenon of Russia's transition. The explanations of barter include tight monetary policy, tax evasion and poor financial intermediation. 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 dataset on barter transactions in Russia, we show that empirical evidence is consistent with the model's predictions.TEST

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Bibliographic Reference

Guriev, S and Kvassov, D. 2000. 'Barter For Price Discrimination?'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=2449