ISH conference platform, International Conference on Community and Complementary Currencies 2011

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Business-to-business barter exchange: A Viable Marketplace

Melina Young

Last modified: 2011-02-02

Abstract


The great majority of activity and growth in business-to-business barter exchange is in the private sector, a sign of their viability.  Some of the biggest complementary currencies operate as part of a business-to-business barter exchange.    The WIRBank is one of the largest barter exchange organizations in the world with approximately 60 000 small and medium enterprise (SME) members who hold 890 million WIR Franc in their accounts.  The International Reciprocal Trade Association estimates 400 000 businesses are engaged in Modern Trade and Barter generating $12 billion of trade every year.

My purpose in this paper is to explore and introduce possible factors for the viability of business-to-business barter exchange.  I also consider how some of these factors may contribute toward the stability of barter exchange and the economy.

I view business-to-business barter exchanges as markets where trade is facilitated among the SME members of an exchange managed by a central administration and facilitated by the medium of exchange created for use within the exchange.  The characteristics at the meso or organizational level are considered such as the market, the membership, the administrative organization and the medium of exchange.  Macro-level characteristics include institutional status, the creation of standards and the impact of information technology, micro-level characteristics include pricing. 

Finally, the nature of the complementarity between the business-to-business barter credit and the national currency are examined.  I view the complementary currency system to be comprised of two currencies that function dynamically.  The interaction between the WIR and the CHF have been observed by students, astutely by Stodder (2005).  The countercyclical pattern of activity between them is a key characteristic of this complementarity.  Stodder notes that at the heart of this countercyclality lies the capacity of the B2B barter system to facilitate trade in “excess capacity”.  These and other observed activities and characteristics of the complementary currency system are connected to the characteristics and functioning of the business-to-business barter exchange and are integral to the analyses offered in this paper. 

Full Text: Young paper