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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 ?
There are many benefits to bartering, such as conserving cash by receiving needed goods and services without monetary exchanges and the potential to increase market penetration in new areas while maintaining cash customers.
The revival of bartering appears to be driven in part by the more competitive global business environment.
We've been bartering first-line merchandise to finance an expanded advertising budget.
We had to overcome the negative perception of bartering.
port cities and are numerous in countries where bartering is common.
Actually, all three parties to such a transaction are better off; the tenant is better off because it has received goods and services that are of more value to it than the sublease rental it otherwise would have received in a down market, the bartering firm is better off since it has obtained sublease rental in excess of the cost of the traded goods and services, and the sublessee is better off because it has obtained space for less than it otherwise would have been required to pay.
Bartering dates back to at least the 15th century, when people traded everything from food to animal hides.
Integrating ARTrade into Bentley's global trade marketplace will enable participating hotels and resorts, in addition to trade exchange members throughout the world, to browse through ARTrade's extensive online catalog, and make an online purchase using the trade dollars they have earned by bartering their own products or services.
Don Mardak, president and chief executive officer of International Monetary Systems, commented: "We are most pleased to announce this strategic acquisition which will enhance the bartering activities of our Continental Trade Exchange (CTE) members in Sonoma County, Sacramento, Brentwood, the East Bay area, Silicon Valley and the Central Coast regions of California.
He added, "Part of its appeal these days is that bartering allows goods that would otherwise have to be bought with hard-earned cash to instead be acquired at a wholesale price or the value of a product when measured in overhead costs.
The National Organization of Trade Exchanges estimates that 65% of corporations listed on the New York Stock Exchange are involved in bartering and that corporate trade/barter is a $20 billion industry.
The success of this philosophy was recently recognized in a New York Times article (NY Times E-Commerce Report: Internet Retailers Re-Discover bartering 2/12/01), showing Synergy Brands taking advantage of barter to secure over $65 million in advertising and related services with the Sinclair Broadcasting Group, which owns or operates 62 television stations in 40 markets.