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 ?
Finally, bartering involves an element of perceived equal value.
Maarcha.com is Pakistan's first ever online bartering platform that has been launched by young business professionals.
Reports of bartering for chickens (28) and purchasing fuel from a patient in remote Alaska (29) show that not all physicians agree and why they feel that professional codes of ethics reflect an urban bias.
He added that the government's studies of the bartering system must include ways of implementing the system and the types of goods traded for the sake of the Russian tourists.
I started bartering as a teenager when I had no money, but did have the skills to repair household appliances.
With the exception of the Psychology profession (American Psychological Association, 2002), the ethical standards of the various helping professions discourage the practice of bartering because of the resulting dual relationship it creates between practitioner and client (American Counseling Association, 2005; Clinical Social Work Federation, 1997; National Association of Social Workers, 1996).
Amounts also may be treated as paid or incurred during the taxable year if the taxpayer provides property or services (rather than cash) in exchange for property or services (a bartering transaction).
Emmert offers an outlook for bartering over the next 10 years.
CASH-strapped Brits are beating the credit crunch by going back to an ancient way of doing business - bartering.
WITHOUT a functioning banking system we'd be back to the system of bartering...
"But when it comes to bartering back home, our stiff upper lip gets in the way."
Men are more likely to haggle abroad, with 68 per cent bartering compared with 53 per cent of women.