Developed between gm-fisher body as result of transaction

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Reference no: EM13904400

In 1919, General Motors Corporation hired Fisher Body to produce closed metal bodies for their cars. At this time most car bodies were made from wood. The metal body was a novelty, the demand for which and the costs of producing were, to a large extent, unknown.

(a) What types of asset specificity might have developed between GM and Fisher Body as a result of this transaction?

(b) Asset specificity is one condition needed for hold-up to occur. Discuss what else is necessary for hold-up to occur and whether it was likely in this example.

(c) If GM and Fisher Body anticipated possible hold-up problems in this transaction, what types of things might have been in their contract to prevent hold-up?

Reference no: EM13904400

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