Publisher's Synopsis
Excerpt from Determinants of Electronic Integration in the Insurance Industry: An Empirical Test
The transaction cost perspective contends that vertical integration is preferred over market exchange when the sum of transaction and production costs of market exchange exceed those of hierarchy. The critical determining condition for high transaction costs is the existence of transaction-specific assets (williamson, 1975, 1985, 1989; Klein, Crawford, and Alchian, 1978) within a broader context of environmental uncertainty, information asymmetry due to bounded rationality, and opportunism in the presence of a limited number of potential players in the marketplace. The key notion underlying this proposition is that behavioral conditions (bounded rationality and opportunisrn) combine with environmental conditions (small numbers exchange and uncertainty) to create high market transaction costs. The genesis of these costs is the possibility of appropriation of quasi-rents by one or the other party from the opportunistic reinterpretation of unforeseen contingencies in an exchange relationship. In order to avoid being 'held up' in this way, this perspective suggests a classic safeguard of internalization of the transaction through vertical integration. Williamson (1979; 1985) argues that asset specificity is a major determinant of transaction costs. He contends that the normal presumption that recurring be efficiently mediated by autonomous market contracting is progressively weakened by asset specificity (1979: p. The basic proposition relating transaction costs to governance mechanisms has been progressively refined with greater distinctions among various forms of asset specificity and increasing array of empirical research. For instance, constructs derived from. This model have been adopted as the determinants otz backward integration (monteverde and Teece, 1982. About the Publisher Forgotten Books publishes hundreds of thousands of rare and classic books. Find more at www.forgottenbooks.com This book is a reproduction of an important historical work. Forgotten Books uses state-of-the-art technology to digitally reconstruct the work, preserving the original format whilst repairing imperfections present in the aged copy. In rare cases, an imperfection in the original, such as a blemish or missing page, may be replicated in our edition. We do, however, repair the vast majority of imperfections successfully; any imperfections that remain are intentionally left to preserve the state of such historical works.
