coincidence of wants

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When two parties each hold goods that the other party wishes to have. This is the condition for a barter transaction to be agreed upon. In the absence of money, if an agent wants to trade good A for good B, they have to find another agent willing to trade good B for good A. This is achieved when there is a coincidence of wants. The inconvenience of this led to the rise of professional traders, acquiring goods they did not want for themselves but could exchange again, and to the use of money as a medium of exchange.

Subjects: Economics.

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