1. Williamson asserts that opportunism does not pose the same difficulties for transactions within firms as it does for transactions between firms. This is not uncontroversial. Why does he believe that this is true?
In light of what you have learned in the class to date, do you believe his position is reasonable? Why or why not? [There is no single right answer to this part of the question, but this does not give you free rein to argue unconvincingly...]
2. Define asset specificity. Provide examples of site specificity, physical asset specificity, and human asset specificity not provided in class or in articles. If you feel that any of your examples may be too subtle for me to see at once, explain them.
3. What is horizontal free riding? Why is it a problem addressed in franchising contracts? What elements of these contracts address this problem?
4. True, false, or uncertain: Klein and Saft view all tie-in arrangements as efficiency-reducing. Explain your answer.
5. During the late 1880s, new, more efficient, means of producing (packing) meat were invented. Relatedly, Chandler writes that: "In 1882, Gustavus F. Swift, a Chicago meatpacker...began to build a nationwide distributing organization which owned, besides many [refrigerated railroad] cars, a network of refrigerated warehouses that also served as branch offices for the company's wholesale marketing forces."
From the analysis in class and in the readings regarding asset ownership and organizational change (two different topics), what forces provided Swift the incentive to a) own his own refrigerated railroad cars (as opposed to the railroad owning such cars), b) integrate downstream into the distribution and marketing of his meat? What other investments would you expect that Swift made at approximately the same time and why?
6. If two inputs are complementary, then what can we say about their marginal products? Suppose three inputs are complementary and the price of one of them drops. What, if anything, can we say about the firm's demand for the other inputs?
If two technologies are complementary, then they are innovationally complementary as well. What does this mean? In what sense were innovations between 1850 and 1900 complementary?