How to Haggle and Stay Firm: Barter as Mutual Price Discrimination
E. Magenheim and Peter Murrell ,
( 26 )
Economic Inquiry

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 and yields predictions concerning the circumstances under which barter is likely to occur. 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.

Links to Researchers