Transaction costs

Definition

Transaction costs are the expenses incurred during the process of making group decisions, which can include time, effort, and resources. These costs arise from coordinating and operating within a collective framework to achieve shared political goals.

Related terms

Collective Action Problem: A situation where all individuals would benefit from a certain action, but the associated cost makes it unattractive for any single individual to undertake it alone.

Free Rider Problem:

The condition in which some members of a group benefit from resources or services without paying their fair share of the costs.

Coordination Costs: The efforts and resources required to organize members of a group so that they can work together effectively