Market impact is a transaction cost related to:

Market impact refers to the effect that a large transaction has on the price of a security. When an investor executes a trade, especially in large quantities, the act of buying or selling can alter the prevailing market price. This is particularly significant in less liquid markets, where the size of the order can push prices in a direction that doesn't accurately reflect the underlying value of the asset.

Choosing a price concession as the correct answer underscores the understanding that market impact is essentially about how the transaction distorts market equilibrium through buying or selling pressure. If a trader places a large buy order, it can drive the market price up, leading to higher purchase costs than anticipated. Conversely, a large sell order can depress the price, resulting in lower sale proceeds. These price changes represent the transaction cost of executing the trades and illustrate the broader implications of supply and demand dynamics in the market.

This distinction is crucial because it separates market impact from other transaction costs such as brokerage commissions, regulatory fees, or settlement delays, which, while relevant, do not directly pertain to the immediate price effects caused by the act of trading itself. Understanding market impact helps traders and investors strategize on how to minimize these costs, particularly in managing large transactions.