Transactions Costs

The costs associated with making, monitoring and enforcing agreements/transactions/contracts etc. The agreements may be formal or informal and transaction costs may be incurred before and after an agreement is made. A large proportion of the costs are associated with acquiring information about the nature of an agreement (e.g. the quality of goods or services being transacted) and the reliability of other parties to the agreement. Transaction costs are incurred gaining information or commitments in order to reduce risks of loss in a transaction.