The double coincidence of wants, also known as the double coincidence of needs, is a concept in economics that refers to the simultaneous exchange of two goods or services between two parties. For a trade to take place, both parties must not only have something that the other wants, but they must also want what the other has to offer.
In a barter economy, for example, the double coincidence of wants is necessary for trade to occur. If one person has a surplus of apples and another person has a surplus of oranges, they can only trade if both parties are willing to exchange their goods. If one person wants apples and the other wants oranges, then a trade can take place. However, if one person wants apples and the other wants money, then a trade cannot occur unless a third party is present who has both money and oranges.
The double coincidence of wants can also be a barrier to trade in a modern economy that uses money as a medium of exchange. For example, if one person has a car they want to sell and another person has a bicycle they want to sell, they cannot trade directly unless both parties want what the other has to offer. In this case, a third party, such as a car dealership, may be needed to facilitate the trade by buying the car and then selling it to someone who wants a car, while also buying the bicycle and selling it to someone who wants a bicycle.
The double coincidence of wants can also be overcome through the use of intermediaries, such as banks and financial institutions, which can provide loans and credit to facilitate trade. For example, if one person has a car they want to sell and another person has the money to buy it, but the second person does not want a car, the trade can still take place if the second person is willing to take out a loan to buy the car. In this case, the bank acts as an intermediary, providing the necessary credit to facilitate the trade.
Overall, the double coincidence of wants is an important concept in economics that highlights the need for both parties to have something that the other wants in order for a trade to take place. It is a fundamental aspect of trade that is present in all economic systems, from barter economies to modern market economies.