TRANSACTION COSTS, REGULATION, AND SUBCONTRACTING AT NUCLEAR POWER PLANTS

Abstract Monitoring problems, firm-specific assets, and regulation influence the relative costs in a firm's make-or-buy decision. At nuclear power plants, legal limits on radiation exposure are thought to be a significant factor in determining which tasks to subcontract. In an examination of 30 tasks at nuclear power plants from 1978 to 1986, contract employees are more often hired for tasks with higher radiation exposure, where monitoring is difficult, and where firm-specific assets are important.

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