Which of the Following Is True with Regard to the Difference

Multiple Choice

Which of the following is true with regard to the difference in production costs between an item produced in a vertically integrated firm and an item exchanged through an arm's length market transaction as the level of asset specificity increases?

A) The cost difference increases with greater asset specificity
B) Scale-based advantages of outside suppliers are likely to be stronger with greater asset specificity
C) The cost difference declines with greater asset specificity
D) Scope-based advantages of outside suppliers are likely to be stronger with greater asset specificity
E) The costs are negative for all levels of asset specificity