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Explain how asset specificity can lead to transaction costs please give 2 examples Please explain well and...

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General Management

Explain how asset specificity can lead to transaction costs

please give 2 examples


Please explain well and upto 500 words

Please solve asap

Answer & Explanation Solved by verified expert
4.3 Ratings (717 Votes)
Asset Specificity can be defined as the degree or extent to which a thing for instance resource or asset or person for instance employee of value can be adapted for any other purpose Therefore assets with high specificity can be used for certain specific purposes or tasks in certain specific circumstances The more flexible resources are assets with low specificity and hence they can be more valuable because of their versatility In general assets that have been customized and personalized will have low specificity as they are made to attain the special objectives for the clients Assets having low specificity will carry high resale value as they can be used for many different purposes and therefore will have a larger market and demand    See Answer
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