Make or Buy? Flashcards
1
Q
Are there existing…
A
existing suppliers with economies of scale, that in house either takes time to build or simply cannot do so
2
Q
Are there significant…
A
significant relationship specific assets, coordination problems
3
Q
Is a detailed…
A
detailed contract considered infeasible and costly
4
Q
Is common…
A
common ownership needed to mitigate contracting problem
5
Q
If yes to all…
A
optimal for firm to vertically integrate, otherwise use the firm as transaction cost is lower than in-house
