Explain Why Barter Is Viewed As The Most Restrictive Counter-trade Arrangement

Explain Why Barter Is Viewed As The Most Restrictive Counter-trade Arrangement

The simplest form of countertrade is barter. Barter is the direct exchange of goods and/or services between two parties without a cash transition.

First, if goods are not exchanged simultaneously, one party ends up financing the other for a period.

Second, firms engaged in barter run the risk of having to accept goods they do not want, cannot use, or have difficulty reselling at a reasonable price.

For these reasons, barter is viewed as the most restrictive countertrade arrangement. It is primarily used for one-time-only deals in transactions with trading partners who are not creditworthy or trustworthy.

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