Professor [[Ronald Coase]] did not first coin the term "transaction cost," but he was its most informed scholar. He wrote in his famous papers of 1937 and 1961 that transaction cost is "the cost of using the price mechanism" or "the cost of carrying out a transaction by means of an exchange on the open market."
In his 1961 paper, Coase elaborated on the concept without using the term (p. 15):
:In order to carry out a market transaction it is necessary to discover who it is that one wishes to deal with, to inform people that one wishes to deal and on what terms, to conduct negotiations leading up to a bargain, to draw up the contract, to undertake the inspection needed to make sure that the terms of the contract are being observed, and so on.