The transaction cost theory developed by Coarse and Williams could suggest the following
A) A call for smaller organisations and a larger role for markets
B) Efficient organisations and efficient markets are essentially in the same position
C) Internalizing resources for integration incurs lower transaction costs than contracting externally
D) Organisations exist because transaction costs within firms are always higher than in external markets

Question

Quizplus · Accepted Answer

The transaction cost theory developed by Coase and Williamson suggests that internalizing resources for integration incurs lower transaction costs than contracting externally. Therefore, choice C is correct. Choice A is not correct as the theory does not call for smaller organizations, but rather proposes that organizations exist to minimize transaction costs. Choice B is not correct as the theory acknowledges that organizations and markets behave differently and have their strengths and weaknesses. Choice D is also incorrect as the theory states that organizations exist when transaction costs within firms are lower than in external markets.

The Transaction Cost Theory Developed by Coarse and Williams Could