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How to Haggle and to Stay Firm: Barter as Hidden Price Discriminatio n

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  • Magenheim, Ellen
  • Murrell, Peter

Abstract

Barter transactions, conducted openly by established corporations, play an increasingly significant role in the U.S. economy. The model developed here helps explain why firms use barter. It is shown that when two firms barter goods used as inputs, price discrimination occurs. This price discrimination is hidden from the firms' other customers because the real values of the transacted goods to the barterers are different from the accounting prices used in the transaction. Since observed price discrimination might have an adverse effect on the selling firm's future bargaining power, barter will have value as a means of hiding price discrimination. Copyright 1988 by Oxford University Press.

Suggested Citation

  • Magenheim, Ellen & Murrell, Peter, 1988. "How to Haggle and to Stay Firm: Barter as Hidden Price Discriminatio n," Economic Inquiry, Western Economic Association International, vol. 26(3), pages 449-459, July.
    • Handle: RePEc:oup:ecinqu:v:26:y:1988:i:3:p:449-59
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    Cited by:

    1. Guriev, Sergei & Kvassov, Dmitri, 2004. "Barter for price discrimination," International Journal of Industrial Organization, Elsevier, vol. 22(3), pages 329-350, March.
    2. à lvarez-Albelo, Carmen D. & Hernández-Martín, Raúl & Padrón-Fumero, Noemi, 2020. "The effects on tourism of airfare subsidies for residents: The key role of packaging strategies," Journal of Air Transport Management, Elsevier, vol. 84(C).
    3. Marshall, John F. & Wynne, Kevin J., 1996. "Synthetic barter: Simulating countertrade solutions with swaps," Global Finance Journal, Elsevier, vol. 7(1), pages 1-12.
    4. Sergei Guriev & Dmitry Kvassov, 2000. "Barter for price discrimination? A theory and evidence from Russia," Working Papers w0007, New Economic School (NES).
    5. Stodder, James, 2009. "Complementary credit networks and macroeconomic stability: Switzerland's Wirtschaftsring," Journal of Economic Behavior & Organization, Elsevier, vol. 72(1), pages 79-95, October.
    6. Ewa Baranowska-Prokop & Jacek Prokop, 2007. "Dyskryminacja cenowa a transakcje wiązane," Gospodarka Narodowa. The Polish Journal of Economics, Warsaw School of Economics, issue 3, pages 67-84.

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