Barter
The Barter System
?Standard economic theory dismisses barter as an extinct and inefficient system of transactions that may only be observed in backward economies.? (Dalton, G. 1982). There are many problems associated with barter transactions including double wants and the cost of finding potential buyers for the various goods and services. However, there have been arguments that the most important deterrent to the barter system is the cost of gathering information about the characteristics and attributes of goods available for exchange, maintaining that when the cost of gathering this information exceeds barter benefits, a monetary system is used. Also, a lack of information about the quality of products is what makes a monetary system more appealing over the barter system, and since money is universally recognized it is preferred. When money is used to conduct transactions, a shorter time period is required to make a trade because exchange of high quality products is encouraged.
However, a few studies have presented a rationale for legal restrictions on barter under certain conditions (Wallace, 1988). For example, consider a household?s interest to barter in order to supplement their monetary purchases in the presence of unexpectedly high demand. It
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