transaction

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Transaction

The delivery of a security by a seller and its acceptance by the buyer.

Trade

The voluntary exchange of goods and/or services for money or an equivalent good or service. In ancient times and frequently even now, trade was conducted through the bartering of goods. In developed economies, trades are usually made with an intermediary, especially money or credit. Trade is regulated by laws of the particular jurisdiction in which a trade is made. Common restrictions include prohibitions on selling stolen property or non-existent goods. Most states, however, have much more complex regulations for trade, depending on the complexity of goods and services traded in their jurisdiction. States also regulate trade between parties in different jurisdictions. For example, two countries may encourage trade between each other, or, more famously, discourage trade through quotas and/or tariffs.

In modern finance, trade especially refers to trade on securities exchanges. For example, the sale of a stock from one investor to another is known as a trade. This type of trade is regulated by special agencies in the appropriate jurisdiction; trade in the United States is regulated by the SEC, among other organizations. See also: Countertrade, Free trade, Protectionism.

transaction

See trade.

transaction

the exchange of an INPUT, GOOD, SERVICE or ASSET between two or more individuals or firms. Transactions can take place on an ‘arm's length’ basis, with individuals and firms buying and selling through a MARKET, or transactions may be ‘internalized’ and conducted through an internal ORGANIZATION, involving exchanges between the various departments/divisions of a VERTICALLY INTEGRATED firm (or DIVERSIFIED FIRM or MULTINATIONAL ENTERPRISE).

Transactions have a number of characteristics, which have an economic significance, including their ‘size’ (e.g. the transfer of a single item or large number of items), their ‘frequency’ (e.g. transfers may occur on a ‘one-off basis or may occur continuously, daily or weekly), and their ‘complexity’ (e.g. transfers may be relatively simple or highly technical and sophisticated).

The specification of transactions and the terms of exchange (e.g. prices to be paid) are usually incorporated into a legally binding CONTRACT between the parties involved when transfers take place through the market.

Transactions are conducted within the firm through established procedures and protocols governing input procurement, production, distribution and marketing. Typically, a system of internal TRANSFER PRICES is used to value interdepartmental exchanges of inputs, goods and services.

A key focus of modern theories of the firm and markets are the determinants of the relative efficiencies of conducting transactions through the market or within the firm. A number of considerations are relevant to this issue:

  1. the relative costs of transactions through the market compared to within the firm per se (see TRANSACTION COSTS);
  2. the importance of transaction costs vis-a-vis the firm's total supply costs (production and selling); and
  3. strategic considerations such as controllability of inputs. For example, the transaction costs of using the market may be substantially higher than transactions within the firm arising from the need to find suitable external input suppliers and distributors and draw up and monitor contracts with them. Superficially, this would indicate that an internal organization is preferable to using the market. However, the ‘savings’ on transaction costs may be offset by higher internal administrative costs and AGENCY COSTS.

transaction

The EXCHANGE of an INPUT, GOOD, SERVICE or ASSET between two or more individuals or firms. Transactions can take place on an ‘arm‘s-length’ basis, with individuals and firms buying and selling through a MARKET, or transactions may be ‘internalized’ and conducted through an internal ORGANIZATION, involving exchanges between the various departments/divisions of a VERTICALLY INTEGRATED firm (or DIVERSIFIED FIRM or MULTINATIONAL COMPANY).

Transactions have a number of characteristics that have an economic significance, including their ‘size’ (e.g. the transfer of a single item or large number of items), their ‘frequency’ (e.g. transfers may occur on a ‘one-off basis or may occur continuously, daily or weekly), and their ‘complexity’ (e.g. transfers may be relatively simple or highly technical and sophisticated).


transaction

The specification of transactions and the terms of exchange (e.g. prices to be paid) are usually incorporated into a legally binding CONTRACT between the parties involved when transfers take place through the market.

Transactions are conducted within the firm through established procedures and protocols governing input procurement, production, distribution and marketing. Typically, a system of internal TRANSFER PRICES is used to value interdepartmental exchanges of inputs, goods and services.

A key focus of modern theories of the firm and markets are the determinants of the relative efficiencies of conducting transactions through the market or within the firm. A number of considerations are relevant to this issue:

  1. the relative costs of transactions through the market compared to within the firm per se (see TRANSACTION COSTS);
  2. the importance of transaction costs vis-à-vis the firm's total supply costs (production and selling); and
  3. strategic considerations, such as controllability of inputs. For example, the transaction costs of using the market may be substantially higher than transactions within the firm, arising from the need to find suitable external input suppliers and distributors and to draw up and monitor contracts with them. Superficially, this would indicate that an internal organization is preferable to using the market. The ‘savings’ on transaction costs, however, may be offset by higher internal administrative costs and AGENCY COSTS.

Moreover, these savings may be small relative to the firm's total operating costs, which might then be inflated by having to undertake uneconomic operations. For example, if a firm undertakes self-supply of inputs, its own needs for these inputs may be too small to generate cost savings available to outside specialist suppliers through exploiting ECONOMIES OF SCALE. Thus, any savings on transaction costs would be more than offset by higher (self) production costs (see MAKE OR BUY). This said, it may be more advantageous strategically for a firm to become its own input supplier despite higher internal production costs, so as to have full control of a vital input rather than risk being ‘held to ransom’ by powerful outside suppliers. See INTERNALIZATION, ASSET SPECIFICITY, ASYMMETRICAL INFORMATION, MORAL HAZARD, ADVERSE SELECTION, OUTSOURCING.

References in periodicals archive ?
In the present longitudinal study, we examine whether marital distress of parents and the emotional adjustment of adolescents and young adults are transactionally related and whether this differs according to adolescent gender and age group.
Some CEOs still just talk transactionally about what it takes to move one 10-pound object from one place to another in the world, independent of a strategic view.
6) Furthermore, the technical means available to provide financial services are themselves open to change, so the system itself must also be adaptable if it is to remain transactionally efficient over time.
Examiners noted that Westamerica Bank's primary business strategy was to serve the needs of small- and middle-market businesses and professionals through the creation of ongoing rather than transactionally based banking arrangements.
The school failure theory (Osher, Woodruff, & Sims, 2002; Post, 1981) asserts that learning, emotional/behavioral, and intellectual disabilities lead either directly to school failure or transactionally to school problems and failure causing negative self-image, which in turn leads to school dropout, suspension, and delinquency.
John and Rochester bear projections of Jane's animus, the former negative, the latter initially ambivalent but ultimately positively transformed; it is equally important to reverse the analysis transactionally, observing that Jane joins Bertha in bearing Rochester's anima-projections (and that they, too, respectively, enact positive and negative roles).
However, many of these same firms also engaged in practices considered more transactionally oriented, such as mass-market communication.
Therefore, meaning and signs in a language classroom are socially introduced, re-enforced, transformed, or modified through social speech and allow for language to be used transactionally between individuals instead of only for purely expressive reasons (Britton, 1970, 1977; Mantero, 2002b).
One, the narrative authority of teacher knowledge (Olson, 1993, 1995), explains how teachers develop their knowledge transactionally.
But for all other databases, we go to integrators and access the databases we need transactionally.
THEME 2: ILLNESS AND DEVELOPMENT ARE TRANSACTIONALLY RELATED

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