In the case of specific inputs:
A)the firm producing the input is in a precarious bargaining position.
B)coase theorem does apply.
C)the firm buying the inputs is in a precarious bargaining position.
D)special contractual protection is not needed.

Question

Quizplus · Accepted Answer

If the firm producing the input is in a precarious bargaining position, it means that they have limited negotiating power and may have to accept unfavorable terms. This implies that special contractual protection may be necessary to ensure that the firm is not taken advantage of by the buyer. Coase theorem does not directly apply in this situation as it assumes that both parties have equal bargaining power.

In the Case of Specific Inputs