Friday, October 20, 2006

Money and Barter (yet again)

Back in April, 2006 I posted about "one red paper clip." It was an interesting exercise that had someone trying, through a series of trades, to barter a red paper clip for a house. I used it as an example about inefficiencies of barter, etc. I followed up in July when the last trade was made.

Now I draw your attention to an article by Tyler Cowen in National Post that examines the real cost of bartering. It's worth a read.

Do you think this would be a usable example for your students on the inefficiencies of barter, and why we use money?

Posted by TSchilling at October 20, 2006 5:12 PM

That is a great, timely story illustrating barter. In the classroom, it might be nice to find numbers and estimate time to compare bartering for a house to buying a house with money. I think the costs might be close to equal. In this case I think the publicity generated by barter, probably made bartering a better deal - score one for rational economic decision making!

Posted by: Jennifer at October 20, 2006 9:25 PM

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