transaction cost

Transaction costs are the costs incurred when a market transaction is carried out.

Transaction costs are incurred, for example, when buying shares on the stock exchange, costs for the broker, etc.. Transaction costs are also the search and information costs, e.g. visiting different shops, or the time that passes before a product is bought. The Internet makes it possible to significantly reduce transaction costs. Stock exchange orders can be processed automatically, and information transparency is replaced by e.g. price search engines, which replace the time-consuming and costly information gathering that was necessary in the past.