Specific investment, economies of scale, and the make-or-buy decision:A test of transaction cost theory

Lyons, B.R. (1995) Specific investment, economies of scale, and the make-or-buy decision:A test of transaction cost theory. Journal of Economic Behavior and Organization, 26 (3). pp. 431-443. ISSN 0167-2681

Full text not available from this repository. (Request a copy)

Abstract

This paper develops empirical tests of three hypotheses arising from transaction cost theory, as developed by Oliver Williamson. Evidence is provided from a new dataset on 178 inputs gathered from UK engineering firms. The probability of buying-in specialised inputs is higher if the production technology is non-specific, but only if there are economies of scale or scope. Furthermore, the economies of scale/scope effect is much reduced in the presence of specific assets. This interactive hypothesis has not been formally tested before. We also believe this to be the first cross-section empirical test of transaction cost make-or-buy theory using European data.

Item Type: Article
Uncontrolled Keywords: contracts,specific assets,transaction costs
Faculty \ School: Faculty of Social Sciences > School of Economics
Related URLs:
Depositing User: Pure Connector
Date Deposited: 22 Nov 2013 14:32
Last Modified: 06 Nov 2018 15:40
URI: https://ueaeprints.uea.ac.uk/id/eprint/44443
DOI:

Actions (login required)

View Item