Transaction costs can include the production, internationalization, distribution, adaptation, translation, and reception of texts, in addition to other costs that are not of key concern to us here (selection and identification of participants, occupation of the channel). Although localization and translation need not always figure in this chain, they can become key elements. There are several reasons for this special importance:

- As we have said, localization and translation are used for communication between cultures, in situations where shared norms have generally not been as firmly established as is the case in communication within a locale.

- The various facets of localization and translation incur relatively high but controllable transaction costs. If kept at expensive levels they can condemn many potentially cooperative relationships to failure.

- There is a link between localization costs and the costs of receiving the output. If a machine-produced translation is relatively cheap to produce but very difficult to read, the low production cost is offset by the high cost at the reception end. By modifying localization and translation costs (for example, by adding pre-editing or post-editing to machine translation), one can also modify reception costs and thus extend or restrict the number of people able to participate in the cooperation.

Each of these points requires further comment.

Negotiation theory has long recognized that the differences between political and linguistic cultures present special difficulties for any international agreement. This does not mean all cultural differences are of equal importance. When Rocky or Rambo grunts something idiomatic that the American audience finds difficult to understand (was it English? was it language?), a pedantic dubber or subtitler could spend hours locating the nuance, analyzing its contextual discursive impact, and calculating a target version. But that intermediary would soon be out of business. The pertinent mutual benefits (money for the film industry, visual action for the audience) require minimal localization. In such a situation any grunt will do, although a subtitled one would probably be so obtrusive as to reduce mutual benefits. The intermediary should move on to more demanding tasks as quickly as possible. At the other extreme, however, there are cases where potential mutual benefits are so great and yet so difficult to attain that extremely high translation costs are justified. An Israeli government interested in its relations with Syria employed the prestigious translation theorist Gideon Toury (while doing his miluim for the Israeli state) to translate a biography of President Hafez Assad into Hebrew, complete with the employment of Arabists to revise the text and to add an introduction. When the stakes are high, the social effort put into localization can also be high.

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