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Must-read unless you are really up on transaction cost. As Simon says, companies that win tenders by bidding low have an incentive to cut quality. The question is: is it possible to stop this happening? It’s here that transactions cost economics enters. This perspective began with Ronald Coase’s famous essay, The Nature of the Firm (pdf). Whether we should do a job in-house or through the market depends upon the comparative costs. And, he said, “there is a cost of using the price mechanism.” In our context, this cost is the difficulty or even impossibility of writing contracts which ensure good quality provision.... Stumbling and MumblingOutsourcing: a transactions cost approach Chris Dillow | Investors Chronicle
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Mike Norman considers the following as important: Ronald Coase, transaction cost
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Must-read unless you are really up on transaction cost. As Simon says, companies that win tenders by bidding low have an incentive to cut quality. The question is: is it possible to stop this happening? It’s here that transactions cost economics enters. This perspective began with Ronald Coase’s famous essay, The Nature of the Firm (pdf). Whether we should do a job in-house or through the market depends upon the comparative costs. And, he said, “there is a cost of using the price mechanism.” In our context, this cost is the difficulty or even impossibility of writing contracts which ensure good quality provision.... Stumbling and MumblingOutsourcing: a transactions cost approach Chris Dillow | Investors Chronicle
Topics:
Mike Norman considers the following as important: Ronald Coase, transaction cost
This could be interesting, too:
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Mike Norman writes Peter Radford — 1937
Must-read unless you are really up on transaction cost.
As Simon says, companies that win tenders by bidding low have an incentive to cut quality. The question is: is it possible to stop this happening?
It’s here that transactions cost economics enters. This perspective began with Ronald Coase’s famous essay, The Nature of the Firm (pdf). Whether we should do a job in-house or through the market depends upon the comparative costs. And, he said, “there is a cost of using the price mechanism.”
In our context, this cost is the difficulty or even impossibility of writing contracts which ensure good quality provision....Stumbling and Mumbling
Outsourcing: a transactions cost approach
Chris Dillow | Investors Chronicle