Countertrade arrangements in international trade: A tool for creating competitive advantage?

Abstract

This article discusses microeconomic aspects influencing international intra-industry competitiveness. Countertrade arrangements represent one option available to firms for market entry, along with alternatives such as licensing, plant delivery, or joint venture. The main motivations for countertrade deals, including the element of price discrimination and the self-financing character of barter arrangements, are analysed. Countertrade transactions are an efficient means for firms to implement trade in an environment influenced by government interventions and restricted or limited business practices. It is difficult to claim, however, that they are more efficient than other arrangements in the absence of such distortions.Countertrade competitive advantage compensation agreements joint ventures