Saturday, January 05, 2008


A recent trip to Mexico got me thinking: If bartering for goods became a cultural norm in the U.S., would society be better off? You wouldn't make any less sales-- you'd just be scooting yourself down the demand curve. (Though I suppose prices in a barter scenario could be listed as higher in anticipation of a bargaining process, thus driving off potentially interested buyers, but then again prices oftentimes aren't listed at all.) None of the new sales would be involuntary, so there's surplus to be had on both sides. Granted, there would be transactions costs on both sides, probably more of a burden on the buyer. Information costs would be greater for the seller acting as an agent, and I suppose principal-agent problems would then come into play as well.

It seems that bartering isn't that common in the most highly developed countries...which is probably the most telling fact anyway.

(Edit: Sorry-- by bartering, I mean price negotiation, not "my four chickens for your three goats.")

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