Silva, André de CastroFock, Albert Heinrich2025-02-122025-02-122024-07-032024-01-11http://hdl.handle.net/10362/178882I investigate the relationship between trade size and transaction costs in OTC markets. This involves simulating the search-theoretic model developed by Lagos and Rocheteau (2009), which implies that trade size and transaction costs increase together. For empirical analysis, I utilize the TRACE enhanced dataset on corporate bond trades from 2006 to 2022 and compute the bid-ask spread as a measure of transaction costs. My empirical analysis finds a negative influence of trade size on transaction costs. I discuss the mismatch between the theoretical model and empirical evidence considering the results of other empirical studies.engTransaction costBid-ask spreadOver-the-counter marketTrading frictionTrade sizemaster thesis203864042