This paper uses a model extended from DeAngelo (1981) to examine audit market and audit pricing. When auditors have differential operational efficiencies, the audit market becomes delicate. On one hand, auditees would like to reduce audit fees by to purchasing audit services from the most...

This study examines the audit pricing effects when auditors specialize in industries conducive to transferable audit processes. Our results indicate that specialists charge incrementally lower audit fees in industries with homogenous operations and in industries with both homogenous operations...