Without exchange, which permits us to have a much wider market for our output, these gains would be lost. Transactions costs are an obstacle to exchange. Voluntary exchange is productive because it promotes social cooperation and helps us get more of what we want. However, exchange is also costly. The time, effort, and other resources necessary to search out, negotiate, and conclude an exchange are called transaction costs.
Transactions costs are an obstacle to the creation of wealth.
They limit both our productive capacity and the realization of gains from mutually advantageous trades. People who provide trading partners with information and services that help them arrange trades and make better choices are providing something valuable. Such specialists include real estate agents, stockbrokers, automobile dealers, publishers of classified ads, and a wide variety of merchants. These services increase the volume of trade and actually promote economic progress. Increases in real income are dependent upon increases in real output.