Friday, April 10, 2009

Free Markets (2) - Barter and Giving

A barter exchange is slightly different, but the basic process is the same. A barter exchange takes three forms.

  1. Service for service
  2. Service for goods
  3. Goods for Good.
The form of exchange is similar to the free market exchange
  1. Potential suppliers make an offer
  2. Two people agree to accept each others offers.
  3. The swap is completed.
Both are better off than they were before they made the exchange, because they both end up with something they wanted more than what they had before.

The difficulty of finding a coincidence of needs make bartering less efficient. Finding a person who wants what I have who wants what I have will be quite difficult.

Giving is an offer with a zero price.
  1. You can have my shirt.
  2. Yes it is free.
The person receiving the offer is free to accept or reject the gift.

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