Lyons, B.R. (1995) Specific investment, economies of scale, and the make-or-buy decision:A test of transaction cost theory. Journal of Economic Behavior and Organization, 26 (3). pp. 431-443. ISSN 0167-2681

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Abstract

This paper develops empirical tests of three hypotheses arising from transaction cost theory, as developed by Oliver Williamson. Evidence is provided from a new dataset on 178 inputs gathered from UK engineering firms. The probability of buying-in specialised inputs is higher if the production technology is non-specific, but only if there are economies of scale or scope. Furthermore, the economies of scale/scope effect is much reduced in the presence of specific assets. This interactive hypothesis has not been formally tested before. We also believe this to be the first cross-section empirical test of transaction cost make-or-buy theory using European data.

Item Type:	Article
Uncontrolled Keywords:	contracts,specific assets,transaction costs
Faculty \ School:	Faculty of Social Sciences > School of Economics
UEA Research Groups:	Faculty of Social Sciences > Research Groups > Industrial Economics Faculty of Social Sciences > Research Centres > Centre for Competition Policy
Related URLs:	https://www.scopus.com/pages/publication...
Depositing User:	Pure Connector
Date Deposited:	22 Nov 2013 14:32
Last Modified:	28 Aug 2026 17:30
URI:	https://uea-test-2026.eprints-hosting.org/id/eprint/44443
DOI:

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