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 ?
It ensures that these plans are transactionally performed (all or none), and that the current state of the architecture is preserved.
The owner with a relational market orientation focuses on enhancing and building long-term relationships, as opposed to a transactionally oriented owner who is not interested in the social context of the relationship (Woodside, Wilson and Milner, 1990).
We've been working transactionally with Lilly for almost two decades on the Fisher Clinical Services side, so we had a long history.
Specifically, product support suffers largely from continued reliance on transactionally based systems and processes, inadequate human capital, need for smart managers and smart buyers, organizational challenges, and a lack of shared goals.
Enhanced support for VSS enables transactionally consistent backups of Windows applications as well, enabling administrators to perform single-pass backups that protect both files and applications.
(309) The first circumstance involves interrogation on an unrepresented matter when the defendant is represented on a separate "offense," but where: [T]he two criminal matters are so closely related transactionally, or in space or time, that questioning on the unrepresented matter would all but inevitably elicit incriminating responses regarding the matter in which there had been an entry of counsel.
Best of all, you only pay for forms if you use them, and you pay transactionally by the form, only when you select the form you want.
"Obviously the work is very thin on the ground transactionally on residential and development work at the moment but we've growing massively in some of our other areas, particularly strategic business management "I'm very positive.
What if call centers are transactionally efficient, but relationally unhealthy--even toxic.
Some customers use us transactionally and limit access to where they just send us drawings and specifications, but most engage us very early, which we prefer.
It also turns those markers of distinction into something static, void of the dynamic of change as cultures and contexts blend and influence each other transactionally over time.
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.

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