The Weavers’ Exchange

One weaver made excellent cloth but poor dye. Another made poor cloth but excellent dye. Each sold mediocre finished products.

A merchant saw them at market and said, “Why not trade? Let the first weave all the cloth and the second dye it all.”

The weavers hesitated. “We’d depend on each other.”

The merchant nodded. “Yes. But right now you’re each producing something neither of you is proud of. After the exchange, every bolt would be beautifully woven and beautifully dyed. Both of you gain. Neither loses.”

The current arrangement was stable but wasteful. A Pareto improvement was sitting right in front of them.