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.