barter

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Barter

The trading/exchange of goods or services without using currency.

Barter

To trade one item for another of roughly equal value. That is, bartering occurs without a medium of exchange like money. For example, one may trade 10 apples for 10 oranges. Bartering exists in all societies, though it is less common than monetary transactions. See also: Horizontal Security Exchange, Payment-in-Kind.

barter

an exchange mechanism for buying and selling goods and services which involves the physical ‘swapping’ of one product for another. Generally, barter is a cumbersome and inefficient means of organizing exchanges in an economy, since a large amount of time is wasted in seeking out and finding compatible ‘swap’ partners (i.e. each selling what the other wants to buy), and then haggling over an appropriate exchange rate (for example how many tomatoes equal a sewing machine?). All these difficulties can be overcome by the use of MONEY as a common denominator to conclude transactions and ‘price’ individual products.

For all its disadvantages, barter (or COUNTERTRADE as it is often referred to) is still widely used in the context of INTERNATIONAL TRADE. Firms which are unable to obtain the necessary foreign currencies they require to finance a trade deal (because the government operates FOREIGN EXCHANGE CONTROLS or because the country has simply run out of currencies due to a balance of payment deficit), often enter into a bilateral ‘swap’ deal with firms in other countries arranging a suitable product exchange.

barter

the EXCHANGE of one economic good or service for another. Barter as an exchange mechanism, however, suffers from a number of serious disadvantages:
  1. for barter to take place, there must be a ‘coincidence of wants’, that is, each party to the barter must be able to offer something that the other wants. For example, an apple-grower wishing to obtain oranges must not only find an orange-grower but must particularly find an orange-grower wishing to acquire apples. Finding appropriate exchange partners can involve lengthy search activity, which reduces the time available for actually producing goods;
  2. even if the parties meet up, they then have to agree on an appropriate ‘rate of exchange’, for example, how many apples are to be exchanged for one orange? Haggling over exchange terms is again time-consuming, and where agreement cannot be reached between the two parties each will then have to seek out new exchange partners.

Overall, barter is a very inefficient means of organizing transactions in an economy and has been largely superseded by the PRICE SYSTEM in modern economies, using money as a medium of exchange. See COUNTERTRADE, BLACK ECONOMY

References in periodicals archive ?
He noted that he has proposed the barter trade during his ongoing visit to Tehran, and said, "I hope we reach an agreement in the near future in this regard.
He said that we need to build mutual confidence to overcome the impediments in barter trade and commodity exchanges facilities enabling the two countries to benefit from their proximity and neighborhood.
The Finance Minister directed the Finance Secretary to hold a meeting of all the stakeholders and suggest practical measures to move forward on barter trade and opening of border crossings between the two countries.
One said Malaysia is no longer keen to do barter trades after facing problems in a deal with North Korea in 2009 when $20 million worth of palm oil was to be exchanged for cash and fertiliser components.
Pakistan and Malaysia signed two agreements Friday providing for the construction of a liquid cargo terminal at Port Qasim on the Arabian Sea and a $50 million barter trade between two countries.
He had told Kyodo News in an interview in 1999 in Kabul that he was mostly involved in barter trade with former communist countries in Eastern Europe, particularly Poland, as well as Saudi Arabia and was operating Afghanistan's only private bank.
The government sees barter trade as one of the instruments to accelerate the country's export earnings.
Despite the prevalence of various forms of barter in today's economies, most students are not aware of barter trade as a mechanism for exchange.
Bartering has become a big growth business, one that's expected to grow into a $20-billion annual global business," says Brian Beal, Partner of Value Card Alliance, one of the US's fastest-growing barter trade exchanges.
Another solution, he said, was barter trade between the two countries.
ISLAMABAD -- Finance Minister Ishaq Dar stressing on promoting Pak-Iran barter trade has said that trade with Iran will be enhanced while remaining within the ambit of UN sanctions.
We just agreed on barter trade of goods in relation to electricity supplies," Behzad said.