When asset specificity is very low and there is no market uncertainty,it is best for a firm to:
A)buy in the open market.
B)use a long-term contract.
C)vertically integrate.
D)engage in a joint venture.

Question

Quizplus · Accepted Answer

When asset specificity is very low and there is no market uncertainty, the risk of buying a product or service on the open market is low. In such a scenario, it is best for a firm to buy in the open market to benefit from competition and take advantage of pricing flexibility. This option provides the firm with low cost and maximum flexibility without any long-term contract engagements or joint ventures which could limit the firm's ability to adapt to changes in the market.

When Asset Specificity Is Very Low and There Is No