Friction Costs
Transaction Costs · Switching Costs
The total direct and indirect costs associated with the execution of a transaction, often applied in finance but not limited to that domain.
Origin
British economist Ronald Coase laid the groundwork in his 1937 paper "The Nature of the Firm," asking why firms exist if markets are efficient — and answering that "the cost of using the price mechanism" makes direct market transactions more expensive than they appear. Oliver Williamson later built transaction cost economics into a full theory in the 1970s and 1980s. Both Coase (1991) and Williamson (2009) received the Nobel Prize for this work.
Everyday Use
Canceling a gym membership shouldn't be harder than signing up — but it often is. Every extra step, form, phone call, or waiting period is a friction cost designed (or just tolerated) to discourage action. You encounter these invisible taxes on your time whenever you switch banks, return a product, or change software providers.