A-Z Popular Blog Markets Search »
Markets
 Advertisements
Related Guides
Consumer Market

Related Topics
Laissez Faire

Market Change

Market Goods

10 Examples of Barter

 , updated on
Barter is the exchange of goods and services without money. The following are illustrative examples.

Commodities

Export firms in two different countries develop a contract to exchange 400 tons of wheat for 300 tons of soybeans without payment.

Products

Neighbors agree to exchange a boat for a motorcycle.

Services

A carpenter builds a garage for an electrician in exchange for some electrical work at the carpenter's summer house.

Assets

The exchange of a small house in the city for 200 acres of land in the countryside.

Multilateral

A barter transaction can involve multiple parties. For example, a carpenter does work for an electrician so that the electrician will do work for a solar installer so that the solar installer will do work for the carpenter.

Hyperinflation

Barter transactions become more common in an environment of hyperinflation whereby local currency is rapidly losing its value. For example, workers at a bread factory may demand to be paid in bread as money becomes relatively worthless.

Deflationary Spiral

Severe deflation causes the value of money to increase with time. This motivates people to hoard money and can inspire barter transactions. For example, trades of used goods such as a television for a bicycle.

Markets

Two-sided markets for trading goods and services such as a digital platform for trading collectable items.

Compensated Trade

A transaction that uses money to compensate for the difference in value between two barter goods. For example, a boat for a motorcycle plus $500.

Reuse

Barter may be inspired by the ethic of reusing things to reduce the impact of production on the environment. For example, reuse enthusiasts who exchange bicycle parts at a repair cafe.

Advantages

Bartering can be a friendly type of transaction between people in a community whereby the exact values of things don't matter because you are helping each other out.
International bartering can conserve foreign exchange reserves. For example, a developing country can conserve hard currency by exchanging commodities with other developing countries.
Barter is taxable in the United States and many other countries. However, it doesn't result in concrete values for transactions and is more open to interpretation.

Disadvantages

Generally speaking, barter has high search costs as it requires a double coincidence of wants whereby both parties to a transaction have things the other side needs. Barter also requires intensive negotiation as values can be difficult to determine. In a situation where money loses its value due to inflation, economic activity plummets because bartering isn't nearly as efficient as money.

The Myth of Barter Economies

It is a common myth that barter was a prevalent economic system in traditional economies. This is simply not true. Money is a pervasive feature of history. Early societies typically used commodities as a medium of exchange that can be considered money. For example, shells, stones, metals, barley, rice, salt, alcohol, tobacco and traditional crafts have been used as a form of commodity money. Where money didn't historically exist, traditional economies functioned on a system of personal credit whereby individuals gave to the community when they had and took when they needed based on relationships and an honor system. Historically, the double coincidence of wants required for barter made it impractical as a basis for an economic system. However, barter was common in the form of trade between peoples or nations before international systems of currency exchange were established.

Barter vs Money

Barter is exchange whereby both parties will directly use what they receive in the trade. Money is a medium of exchange that isn't used directly. In the case of commodity money, the commodity is mostly used for exchange and occasionally used directly. For example, gold may be used in exchange but then eventually used in a product such as jewelry.

Barter vs Gift Economy

Barter is a negotiated trade of value. The gift economy is giving to an individual or community without an explicit agreement for anything in return. Historically, the gift economy was common. In a traditional economy, a farmer who enjoys a bountiful harvest may have been expected to share it with the community. The farmer might expect something in return for this but this wasn't explicitly negotiated. For example, the community might help the farmer build a barn.
Overview: Barter
Type
Definition
The exchange of goods and services without a medium of exchange such as money.
Related Concepts

Markets

This is the complete list of articles we have written about markets.
Competitive Market
Consumer Market
Free Market
Laissez Faire
Market Change
Market Failure
Market Forces
Market Goods
Market Power
Types of Market
More ...
If you enjoyed this page, please consider bookmarking Simplicable.
 

References

Mauss, Marcel. The Gift: The Form and Reason for Exchange in Archaic Societies. pp. 36–37.

Markets

A definition of markets with examples.

Imports

The definition of import with examples.

Grey Market

The definition of grey market with examples.

Captive Market

The definition of captive market with examples.

Oligopoly

A list of industries that can be considered oligopolies.

Capitalism Problems

A list of the primary problems with capitalist economies.

Laissez-Faire

An overview of the basic characteristics of laissez-faire capitalism or markets.

Market Types

The common types of market with examples of each.

Democratic Socialism

The definition of democratic socialism with examples.

Business Models

A list of common business models.

Club Goods

The definition of club goods with examples.

Business Model Canvas

A complete guide to creating a business model canvas.

Self-Employment

The common types of self employment.

Value Chain

An overview of value chains with complete examples.

Revenue Examples

The definition of revenue with examples.

Economic Sector

The definition of economic sector with examples.

Tertiary Sector

The definition of tertiary sector with examples.

Cottage Industry

The definition of cottage industry with examples.
The most popular articles on Simplicable in the past day.

New Articles

Recent posts or updates on Simplicable.
Site Map