08 Jun Question What is the impact of the following factors on the optimal method of procuring an input.
Question
What is the impact of the following factors on the optimal method of procuring an input.
a. Benefits from specialization.
Reduce the benefits of spot exchange.
Reduce the benefits of vertical integration.
Reduce the benefits of contracts.
Increase the benefits of vertical integration.
b. Bureaucracy costs.
Reduce the benefits of spot exchange.
Reduce the benefits of vertical integration.
Reduce the benefits of contracts.
Increase the benefits of vertical integration.
c. Opportunism on either side of the transaction.
Lead to less detailed contracts.
Lead to the use of spot exchange.
Lead to contracts that are more detailed or vertical integration.
d. Specialized investments.
Make contracts unattractive.
Make spot exchange unattractive.
Make vertical integration unattractive.
e. Unspecifiable events.
Make contracts unattractive.
Make vertical integration unattractive.
Make spot exchange unattractive.
f. Bargaining costs.
Lead to longer contracts or vertical integration.
Lead to shorter contracts.
Lead to spot exchange.
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