Part 3/6:
Bargaining and Decision Costs: This category encompasses expenses incurred when negotiating contracts and deciding on purchases. It includes costs related to negotiating prices, drafting contracts, and ultimately deciding on procurement.
Policing and Enforcement Costs: Once an agreement is reached, there are costs involved in ensuring compliance with the terms of the contract. This involves monitoring quality and ensuring that all parties adhere to their obligations under the agreement.
Factors Impacting Transaction Costs
Several factors contribute to the variation in transaction costs: