Abstract
This chapter describes the structure of exchange in barter and monetary economies. A model is considered of two closely related economies. The focus is not on the existence and determination of equilibrium prices, the initial concern of most general equilibrium analysis, but rather on the nature of the transactions that take place once the prices have been determined and are taken as given. One economy is a traditional pure exchange barter economy. The second is an identical economy except that an additional commodity is introduced. In a classical dichotomy world, money may facilitate commerce, and certainly does not impede it. One can show this by the ingenuous approach of describing a barter exchange and simply noting that a monetary exchange identical to the barter exchange except that there is an appropriate N+1st element in each row is a monetary exchange that has all the qualities of the barter exchange from which it was derived.
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