Abstract
This study examines the usefulness of the theory of transaction cost economics (TCE) for the online travel market and investigates customer satisfaction and loyalty with the transaction cost over the Internet taken into account. Using structural equation modelling (SEM), the authors identify the relationships among the antecedents (uncertainty, personal security and buying frequency), the mediating variable (transaction costs) and endogenous constructs (customer satisfaction and loyalty). The findings suggest that the satisfaction and loyalty of customers purchasing travel products over the Internet are affected negatively by transaction costs, which are determined by uncertainty, personal security and buying frequency. Moreover, a significantly negative relationship is identified between buying frequency and customer satisfaction.