Chapter 7

Link:http://www.wpxi.com/news/18994981/detail.html#-
Summary
More and more new businesses are being set up and most of the time they are faced with money problem such as cost of advertisement. So to help the small businesses, Scott Rudy established a bartering business called Pittsburgh Trade Alliance, where you can trade services for other services. If a business needed shoes, they would call the PTA to help them find a business to produce the shoes. Instead of paying the bill back with cash, the business pays with their service. In the last three years, Scott has seen a 30% growth rate in his business with around 600 business owners in Pittsburgh bartering with his business.

Connection
The concept that connects the article to the textbook is the barter system. In this case businesses are trading services for other services. Even though the Pittsburgh Trade Alliance is doing well, there are several of problems that are bound to happen this barter system. One of the problems linked with the barter system is the value of the service. The set value/price of the service is hard to establish, so you may think a certain price is reasonable but other business might not think so. Another problem is divisibility, let’s say a car is worth 10 motorcycles but if the owner of the car wants only 1 motorcycle, it is impossible unless he sells the car and buy the motorcycle with money.

Reflection
I think this system of trading services for services is a great idea to help new/small businesses but one problem a new business might face is low demand for their service. If a member in the PTA offers a service that is not quite up to par and does not have money to upgrade the quality, it would mean that other businesses are likely to reject their services. With no way to expand, the business is expected to fail.

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