According to Williamson's version of transaction cost theory, markets are more effective than hierarchies (≈ organizations) if:
A) There are few actors who offer the same or similar products or services.
B) There is little knowledge of the parties about other parties and their offers.
C) There are few actors who also offer different products and services.
D) There are many actors who offer the same or similar products or services.

Question

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According to Williamson's transaction cost theory, markets are more effective than hierarchies when there are many actors offering the same or similar products or services. This is because in a competitive market, prices will be driven down to the lowest possible level, and consumers will have a wide range of options to choose from. In such a situation, it is more efficient to use markets to allocate resources rather than relying on a hierarchical organization. Option A is incorrect as it suggests the absence of competition, which is not favorable for markets. Option B is also incorrect as it suggests a lack of information, which would increase transaction costs and make hierarchies more attractive. Option C is irrelevant as it does not relate to the effectiveness of markets vs. hierarchies.

According to Williamson's Version of Transaction Cost Theory, Markets Are