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Asset specificity.
Oliver E. Williamson (1932-)
The model.
β(k) = bureaucratic costs of internal governance.
M(k) = governance costs of markets.
k = index of asset specificity.
β(0) > M(0) because advantages of markets not offset by costs of asset specificity.
But β declines faster than M as k increases (M' > β' " k).
ΔG(k) = β(k) - M(k).