22

The main likely reasons why barter is not more common are: The inconvenience of having to find another party who both offers what you want and wants what you offer. Even if such a party can be found, the possible complexity of negotiating a "fair" transaction (eg I'll do your electrical job if you'll clean my windows monthly for the next 3 months). I don'...


16

In the countries that I am familiar with (such as Canada), using barter to avoid taxes is definitely illegal. You are required to report the dollar value of the exchange as revenue. It is treated as an implicit trade of cash along with the trade of goods. Since I am not going to give tax advice to random strangers on the internet, please consult the tax laws ...


4

The Nash bargaining solution DOES maximize the Nash product. You have to separate the playing of the game from the bargaining problem. If the players negotiate a binding agreement they will realize that their maximal total payoff from playing the game is $3$. This can be achieved by playing $(T,L)$ or $(T,C)$, or any mixture of those two profiles. The ...


4

In first world countries, the price of a bottle of water is set by a well-established market. There are millions of prospective buyers of a bottle of water and thousands of prospective suppliers, and while many suppliers are able to achieve brand differentiation, for the most part their water is fungible. Moreover, the supply and demand curves of water are ...


4

The same reason why money became popular in the first place: bartering doesn't scale well. Even if you're able to evade taxes by bartering, the inconvenience makes it difficult to take advantage of this on a large scale. It's only really feasible for casual transactions among family and acquaintenances, not real businesses. When you do barter with these ...


3

Consider: Proposer offers $0$ Receiver always rejects the offer regardless of the amount You should be able to argue that this is a pair of mutually best responding strategies for $T=1$. The $T>1$ cases follow a similar logic.


3

Another sufficient condition for the two solutions to coincide, which is not necessarily the same as symmetry, is that the feasible set $S$ be rectangular. That is, \begin{equation} S=\text{convex hull}\{(d_1,d_2),(d_1,\overline x_2),(\overline x_1,d_2),(\overline x_1,\overline x_2)\}, \end{equation} where $d_i$ is $i$'s reservation utility and $\overline ...


3

It doesn't save money. Keep in mind that revenue taxes are calculated after deduction of expenses. So if I sell something for 50€, and buy something for 50€, the total earnings of my company have not changed, so neither have my taxes. At the same time, the rules for what a company can claim as business expenses might be wildly different between them, but ...


2

The answer depends on the "following solution concepts", which you did not specify. I guess the Nash solution and the Kalai-Smorodinsky solution will be among them. The frontier functions you seem to propose are of the form $y_n(x)=\sqrt{1-\frac{100x^2}{n^2}}$, where $n\in\{1,2,\ldots,100\}$. For the Nash solution you maximize $xy_n(x)$ and after ...


2

I think the best approach to describe this phenomenon is to see it as a change from relational-oriented economics of poor countries (developing countries) to transactional-oriented economics of developed countries. The first is governed by uncertainty: the good’s value is what the customer is willing to pay, it difficult for the seller to calculate all the ...


1

Time is money When the average daily wage is 5 dollars, and many others survive on 1-2 dollars a day, it's worth it to many people to take a few minutes to try to get an extra nickel or dime out of the sale. Also, with high unemployment (especially in cities, since in rural areas there is the availability of subsistence farming as an alternative), the ...


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