TY  - JOUR
AU  - Prendergast,Canice
AU  - Stole,Lars A.
TI  - Non-Monetary Exchange Within Firms and Industry
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 5765
PY  - 1996
Y2  - September 1996
UR  - http://www.nber.org/papers/w5765
L1  - http://www.nber.org/papers/w5765.pdf
N1  - Author contact info:
Canice Prendergast
Graduate School of Business
The University of Chicago
1101 E. 58th Street
Chicago, IL 60637
Tel: 773/702-9159
Fax: 773/702-2699
E-Mail: canice.prendergast@ChicagoBooth.edu

Lars Stole
University of Chicago
Graduate School of Business
1101 East 58th Street
Chicago, IL  60637
Tel: (773) 702-7309
E-Mail: lars.stole@ChicagoBooth.edu
AB  - This paper considers why non-monetary means of exchange, such as barter and the reciprocation of favors, are chosen by firms despite the usual benefits of monetary transactions.  We consider the chosen means of exchange when both monetary and non-monetary exchange mechanisms are available.  We illustrate three potential reasons for the emergence of non-monetary trade.  First, a willingness to barter may reveal information that cannot be revealed solely through monetary trade.  Second, non-monetary trade may constrain the ability of agents to engage in inefficient rent-seeking activities.  Finally, non-monetary trade improves the ability of agents to impose trade sanctions on those who act dishonestly.  We consider a number of applications of each of these ideas.
ER  -