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Understanding BarteringBartering is based on a simple concept: Two individuals negotiate to determine the relative value of their goods and services and offer them to one another in an even exchange.
It is the oldest form of commerce, dating back to at time before hard currency even existed.While the current senior generation bartered with the limited goods they had on hand (i.e., produce and livestock) or services they could personally render (i.e., carpentry and tailoring) to someone they knew, today most Americans have access to a nearly unlimited source of potential bartering partners through the internet.Virtually any item or service can be bartered if the parties involved agree to the terms of the trade.
Individuals, companies, and countries can all benefit from such cashless exchanges, particularly if they are lacking hard currency to obtain goods and services.Benefits of BarterBartering allows individuals to trade items that they own but are not using for items that they need, while keeping their cash on hand for expenses that cannot be paid through bartering, such as a mortgage, medical bills, and utilities.
Bartering can also have a psychological benefit because it can create a deeper personal relationship between trading partners than a typical monetized transaction.
Bartering can also help people build professional networks and market their businesses.On a broader level, bartering can result in the optimal allocation of resources by exchanging goods in quantities that represent similar values.
Bartering can also help economies achieve equilibrium, which occurs when demand equals supply.How Individuals BarterWhen two people each have items the other wants, both people can determine the values of the items and provide the amount that results in an optimal allocation of resources.
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