8 LIMITATIONS OF BARTER TRADE

 HERE ARE 8 LIMITATIONS OF BARTER TRADE

  • Lack of double coincidence of wants: - it is difficult to find two people with the need for each other’s product at the same time.

  • Lack of store of value/ perishability of some commodities: - some goods are perishable thus their value cannot be stored for a long time for future purposes e.g. one cannot store vegetables for exchange purposes in future.

8 LIMITATIONS OF BARTER TRADE

  • Indivisibility of some commodities: -it is difficult to divide some products like livestock into smaller units to be exchanged with other commodities.

  • Lack of standard measure of value: - It is not easy to determine how much one commodity can be exchanged for a given quantity of another commodity.

  • Transportation problem: It is difficult to transport bulky goods especially when there is no faster means of transport.

  • Lack of a standard deferred payment: - The exchange of goods cannot be postponed since by the time the payment is made, there could be fluctuation in value, demand for a commodity may not exist and the nature and quality of a good may not be guaranteed. It may be therefore difficult what to decide what to accept for future payment.

  • Lack of specialization: - Everyone strives to produce all the goods he or she needs due to the problem of double coincidence of wants.

  • Lacks unit of account- it is difficult to assess the value of commodities and keep their record

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