How do traditional markets often compare to digital markets in terms of transaction costs?

Traditional markets often have higher transaction costs compared to digital markets due to several factors. In a traditional market, customers must physically travel to stores, which incurs transportation costs and time. Additionally, the process of searching for products can be more labor-intensive, leading to additional expenses related to time and effort spent in exploring options.

Traditional markets also tend to involve more intermediaries, such as wholesalers and retailers, which can drive up costs due to markups at each stage of the supply chain. On the other hand, digital markets facilitate direct access to a wide range of products and services with minimal friction, often reducing or eliminating costs associated with physical presence and intermediaries.

In contrast to traditional markets, digital markets usually provide users with tools to easily compare prices and find better deals, thereby minimizing search costs. Advertising and marketing in digital platforms can also be more targeted and efficient, often lowering overall marketing spending. Delayed gratification effects can vary based on personal preferences and the nature of the product rather than being unique to one market format. Hence, the statement about traditional markets having higher transaction costs accurately reflects the broader economic principles distinguishing the two market types.