The problem with spot exchange in the presence of specific assets is that both parties:
A) have incentives to behave as principals.
B) have incentives to behave opportunistically.
C) take the risk of price fluctuations.
D) do not take advantage of the economies of scope.

Question

Quizplus · Accepted Answer

In the presence of specific assets, both parties in a spot exchange may behave opportunistically to maximize their own benefits, potentially at the expense of the other party. This is because specific assets often involve investments that are tailored to a particular transaction, making them vulnerable to opportunistic behavior if the relationship dissolves or changes.

The Problem with Spot Exchange in the Presence of Specific