Discuss the optimal method for procuring inputs that have well-defined and measu

Question

Discuss the optimal method for procuring inputs that have well-defined and measurable quality specifications and require highly specialized investments. What are the primary advantages and disadvantages of acquiring inputs through this means? Discuss the optimal method for procuring inputs that have well-defined and measurable quality specifications and require highly specialized investments. What are the primary advantages and disadvantages of acquiring inputs through this means? Discuss the optimal method for procuring inputs that have well-defined and measurable quality specifications and require highly specialized investments. What are the primary advantages and disadvantages of acquiring inputs through this means? Discuss the optimal method for procuring inputs that have well-defined and measurable quality specifications and require highly specialized investments. What are the primary advantages and disadvantages of acquiring inputs through this means?

Explanation / Answer

A contract is the optimal method for procuring such inpus.

Advantages: Prevents one party from taking advantage of superior knowledge(opportunism), fixes the price of trade, prevent underinvestment.

Disadvantages:Costly and time consuming.

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