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Barter for price discrimination

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.
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Submitted on : Friday, November 5, 2021 - 12:40:28 PM
Last modification on : Tuesday, February 1, 2022 - 10:26:10 AM

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Sergei Guriev, Dmitriy Kvasov. Barter for price discrimination. International Journal of Industrial Organization, 2004, 22 (3), pp.329 - 350. ⟨10.1016/j.ijindorg.2003.09.003⟩. ⟨hal-03416759⟩

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