1. Determining the boundary of firm
The consideration of transaction cost

2. The causes of transaction cost
Bounded rationality
Limited knowledge about contracting reduced market transactions
Environmental uncertainty
Many changes caused re-negotiation frequently
Information asymmetries/compactedness
The circumstances for inducing the opportunistic behavior of adverse selection/moral hazard
Asset specificity
Lower reselling/disposal/non-salvageable opportunity higher TC, prohibitively expensive cost
Small number (monopoly/monopsony)
Higher transaction cost while confronting the fewer sellers or buyers

3. Integration decision High-tied Relational contracting
Transaction frequency
low
high
Market/integration
market
low
Asset specificity
High-tied Relational contracting
Bilateral integration
Trilateral integration
high
Internal integration

4. The newspaper/book publisher
Daily publishing and printing frequently without interruption
If contracting outside, the high frequency of publishing operation would make the newspaper publisher locked by the printer
Book publisher
Scheduled book publishing
Project-based negotiation and contracting by means of price bidding