transaction cost theory definition
A theory accounting for the actual cost of outsourcing production of products or services including transaction costs, contracting costs, coordination costs, and search costs.The inclusion of all costs are considered when making a decision and not just the market prices.efinition. A theory accounting for the actual cost of outsourcing production of products or services including transaction costs, contracting costs, coordination costs, and search costs. The inclusion of all costs are considered when making a decision and not just the market prices.