First Difference - Round Trip
> When
Server.Transfer is used, the
redirection is done by the Server itself.
> Hence there is not having any
round trip when
Server.Transfer is used.

> When
Response.Redirect is used, the
redirection is done by the client Browser.
> Hence there is having round trip when
Response.Redirect is used.
Second Difference - Destination Server
> Server.Transfer can only be used to navigate to a page which resides inside the same server.
> Response.Redirect is used to navigate to a page which resides both inside and outside the server.
> For example, suppose our server has two pages. Test1.aspx and Test2.aspx
> From any of two, we can go to other page by using both Response.Redirect & Server.Transfer.
> But we can go to a page outside the server like http://www.google.com only by using
> Response.Redirect.
> Means if you wants to redirect to different domain or server, Response.Redirect should be used.
Third Difference - URL Change
> Suppose we are navigating from Test1.aspx to Test2.aspx.
> If
Server.Transfer is used, then after navigation, the URL will not change.
> That means after navigation, when Test2.aspx is fully loaded, the URL will be Test1.aspx
> But if
Response.Redirect is used, the URL changes to the destination page.
> That means after navigation, when Test2.aspx is fully loaded, the URL will be Test2.aspx.
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