Barter for price discrimination

Sergei Guriev, Dmitri Kvassov

Research output: Contribution to journalArticle

6 Citations (Scopus)

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.

Original languageEnglish
Pages (from-to)329-350
Number of pages22
JournalInternational Journal of Industrial Organization
Volume22
Issue number3
DOIs
Publication statusPublished - 2004 Mar 1
Externally publishedYes

Keywords

  • Barter
  • Oligopoly
  • Price discrimination

ASJC Scopus subject areas

  • Industrial relations
  • Aerospace Engineering
  • Economics and Econometrics
  • Economics, Econometrics and Finance (miscellaneous)
  • Strategy and Management
  • Industrial and Manufacturing Engineering

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