Truck and Barter

Gift Swapping: Reducing the Deadweight Loss of Christmas

Giving a gift at Christmas isn't as good as giving cash, so the idea goes, since the person who receives the gift values it less than something of equal monetary value that they would have preferred more. (That is, the $100 I spend in enrolling you in the Jam-of-the-month-Club is not the same as you spending $100 on buying yourself Halo 2 and Grand Theft Auto: San Andreas. You don't value my gift at a full $100, so there is loss.) This, however, is up to debate.

One of the big stories of this Christmas is the increase in the use of gift cards. They may, retailers hope, the savior of Christmas retail (as opposed to the Savior of Christmas, who I'm sure would be sympathetic to the notion of getting some utility out of giving gifts, agreeing with Tyler Cowen's Point #1).

But this trend faces similar problems. I don't buy much from Pottery Barn, but I do love me some Room & Board. Too bad, then, that I got a gift card to the former. I could force myself to pick up a few things, I suppose, though I wouldn't like it as much as the same amount in cash that I could fork over to my preferred vendor.

Now there's a way around that. SwapAGift.com provides a venue to swap, sell, or buy gift cards. For a fee, of course -- and at $3.99 it seems like a good deal to avoid travel and transaction costs of either buying stuff you didn't really want, or travelling to the store to get the cash value back out of the card (something some stores don't allow).

Markets: now even better for non-secular exchange!

Posted at December 30, 2004 01:51 PM

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