In the course of arbitrating this transfer price dispute, the finance staff asked the purchasing staff to review the outside market situation for the thermostatic control unit. The purchasing staff replied that there was excess capacity and that, as a result of this, prices were very soft. Eventually, the prices would rise- either when the demand for comparable units increased or when some of the suppliers went out of business. The purchasing staff had no doubt that the Refrigeration Division could purchase all its requirements for the next year or two at $2.15 a unit, or even less. The purchasing staff, however, believed that if all the corporation's requirements for this unit were placed with outside suppliers, the price would rise to at least $2.40 because this action would dry up the excess capacity.