Barter and Exchange

Abstract

Barter, as distinct from exchange, is defined by the absence of money both as a medium of exchange and a measure of value. In the absence of a measure of value, complicated transactions between several dealers are hardly possible; and accordingly barter is generally characterized by the absence of competition. In the absence of competition bargains are not determinate in the same sense as in a perfect market. In the former, unlike the latter, case you might suppose the dispositions of the parties, their demand curves or ‘schedules’ (Marshall) known, and yet even theoretically be unable to predict what would be the terms of the bargain.

This chapter was originally published in The New Palgrave: A Dictionary of Economics, 1st edition, 1987. Edited by John Eatwell, Murray Milgate and Peter Newman