Relationship-specificity: Consider a final good firm that owns the final good technology q = Am", where 0 1. A specialized supplier can produce the intermediate good for price Pm per unit. Problem 1: The intermediate good can only be used by the final good firm. It has no value to an outside company. It is also very difficult for someone outside of the relationship to judge the quality of the intermediate good. How do these two properties of the intermediate good lead to the possibility that the final good firm can "hold up" the intermediate good firm? Problem 2: If a = 0.8, A = 1.5, Pm = 1, p = 2, 8 = 0.5, y = 1.25, and f! =0.4, what are the profits of the final good firm if it produces the intermediate good in-house? Problem 3: If a = 0.8, A = 1.5, Pm = 1, p = 2, 8 = 0.5, y = 1.25, and f =0.4, what are the profits of the final good firm if it outsources to the supplier firm and the two firms bargain after production of the intermediate good? Assume that the supplier has bargaining power S and the final good firm has bargaining power 1 - B. Problem 4: Should the final good firm produce the nal good itself, or purchase it from a supplier? Why? Provide some intuition. Asset Dissipation Problem 5: When in the problem of asset dissipation most likely to lead to vertical integration. Explain using the concept of moral hazard