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Define Transaction costs

Define Transaction costs

Answers

Martin
Transaction costs are costs other than the money price that are incurred in trading goods or services. Before a particular mutually beneficial trade can take place, at least one party must figure out that there may be someone with which such a trade is potentially possible, search out one or more such possible trade partners, inform him/them of the opportunity, and negotiate the terms of the exchange. All of these activities involve opportunity costs in terms of time, energy and money. If the terms of the trade are to be more complicated than simple 'cash on delivery' (for example, if the agreement involves such complications as payment in installments, prepayment for future delivery, warranties or guarantees for quality, provision for future maintenance and service, options for additional future purchases at a guaranteed price, etc.).
marto answered the question on March 15, 2019 at 07:32

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