Double coincidence of wants:
The direct exchange of one commodity for another requires direct satisfaction of both the parties in the bargain. The exchange can only be effective if a person is able to spare what the other person wants and at the same time needs what the other can spare. For instance, a person has surplus wheat with him and wishes to exchange it with cloth. He will have to find a person who not only possesses sufficient cloth but also desire wheat. This double coincidence, as is obvious, is very difficult to attain in this civilized world especially where the range of human wants is very wide.
Lack of common measure:
Another difficulty which arises under the system of barter is the absence of common measure which can help in the estimation of relative values of the two commodities. For instance, a man has horse with him and the other cow and both are willing to trade. A man who has a horse assigns the value of` one horse as two cows. The other who has a cow designs the value of one cow as one horse and both stick to their respective valuations. In the absence of common measure of value, the exchange between two parties cannot take place unless both of them assign the same value to different commodities which they possess.
The direct exchange of one commodity for another requires direct satisfaction of both the parties in the bargain. The exchange can only be effective if a person is able to spare what the other person wants and at the same time needs what the other can spare. For instance, a person has surplus wheat with him and wishes to exchange it with cloth. He will have to find a person who not only possesses sufficient cloth but also desire wheat. This double coincidence, as is obvious, is very difficult to attain in this civilized world especially where the range of human wants is very wide.
Lack of common measure:
Another difficulty which arises under the system of barter is the absence of common measure which can help in the estimation of relative values of the two commodities. For instance, a man has horse with him and the other cow and both are willing to trade. A man who has a horse assigns the value of` one horse as two cows. The other who has a cow designs the value of one cow as one horse and both stick to their respective valuations. In the absence of common measure of value, the exchange between two parties cannot take place unless both of them assign the same value to different commodities which they possess.
