In a broader sense, transaction costs refer to
the costs inherent in economic transactions that are not part of the price paid
for a product or service. For example, many people would pay $3 for an
ice-cream in a parlour 100 metres from their home, than drive 3 km to another
parlour for the exact same ice-cream for $2. Why? Because the transaction cost
of petrol, time and effort involved in driving those 3 km there and back are
greater than the $1 saving in the price of the ice-cream.