Transaction costs are quantized

Noah Smith: As I learned that day, transaction costs are very important -- so important that they change our basic understanding of economics. But many economists ignore them when creating their models. And the basic mental frameworks that most of us use to understand the economy -- for instance, good old supply and demand -- leave out transaction costs.

The flow of good require that transaction costs be 'typical', as opposed to average, really the median cost.  The natural result of segmentation of flow is that future flow costs have to be shared, locally. (God I sound like a software geek now!).

So, remember, in the aggregate, redundancy is minimized, by herding (economies of scale).  We have to set the bin size,as in Paul Romer's transportation model.

Quantization is the mathematical term for sticky. I define it as being 'container' ergodic, we tend to return to the median container size, where as the term normally means we return to the same 'clock' rate.