In many modern U.S. industries the following patterns seem to hold:

(a) Small firms are more likely to outsource production of inputs than are large firms;

(b) “Standard” inputs (such as a simple transistor that could be used by several electronics manufacturers) are more likely to be outsourced than “tailor-made”

inputs (such as a circuit board designed for a single manufacturer’s specific needs).

What factors might explain these patterns?