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In contrast, market governance is characterized as transaction taking place without managerial oversight. Firms exist because they can sometimes reduce the costs of negotiating and enforcing terms and conditions of exchange relative to market transacting. Transaction costs may consist of ex ante and ex post costs. In the sales service setting, the ex ante costs include the expense of searching for an independent representative and negotiating the price and contract. The ex post costs, such as incompetent sales service (e.g. not meeting sales quota), are incurred after the contract has been signed but before the entire transaction has been completed...
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