Transaction costs refer to the costs incurred in making an economic exchange. There are several types of transaction costs including search costs, negotiation costs, costs of enforcing property rights, and influence costs. Licensing processes can also incur high transaction costs due to bureaucracy and complex requirements. Underground economic activities that are not reported officially also impose transaction costs and can grow due to factors like an unrealistic tax burden, imperfect labor laws, and difficulties in obtaining business approvals and information. Proposals to reduce informal economic activities and their transaction costs include simplifying laws, decentralizing government power, deregulating to increase individual accountability, and improving transparency around new legislation.