Barter

7 Pages 1794 Words

as the possibility of regular and very predictable actions by firms as well. Barter of inputs by established corporations could be used as a means of price discrimination, demonstrated since the terms of the trading in the barter system are not disclosed. Mutual price discrimination can therefore be hidden from paying customers. And of course, this method can only be deemed as successful if the resale of the input in the market in prevented. This type of happening has been a part of the underground economy in the US for a long time. Gutman (1977) was the first to estimate the size of what he called the ‘subterranean economy’ at $176 billion in 1976. However, he did not estimate the value of the various hidden output components in the nation, because so much of the attention has been paid to international barter, which usually is larger then domestic barter in this country. An estimated 10% of world trade is hypothesized to be in barter form (The Economist, 9 May 1987, p. 61). Hyperinflation, trade restrictions, and foreign exchange problems are main causes for this international barter (Hugh, 1983). On the other hand, domestic barter is usually only consisting of personal barter. This usually takes place through person to person contacts, yet personal barter transa...