transaction cost
Trade friction expense
Transaction cost is the expense of making an exchange beyond the price of the thing exchanged.
These include search costs (finding what you want), bargaining costs (negotiating terms), and enforcement costs (ensuring compliance).
In economics, transaction costs explain why firms exist—some activities are cheaper to coordinate internally than through markets.
The transaction costs of hiring contractors exceeded the savings.
- frictionResistance between touching surfaces
- feePayment for service
- overheadLocated directly above
- red tapeBureaucratic obstacles to action
- exchangeMutual giving and receiving
bargaining · negotiation · middleman · broker · commission · hidden · fine print · market · trade · paperwork · bureaucracy · search · information · due diligence · contract · lawyer · escrow · delay
transaction costpurchase price
Money paid for acquisition
principal amount · production cost · direct cost · intrinsic value · face value
transaction costfree trade
Unrestricted international exchange
perfect competition · direct exchange · liquidity · price transparency · disintermediation
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